Strong ore demand assists Fortescue expansion
Sydney - Fortescue Metals Group Ltd, Australia's third biggest producer of iron ore, said third-quarter shipments jumped 53 percent amid increased demand from steel mills in China.
Ore shipped was 9.4 million metric tons in the three months ended March 31, from 6.2 million tons a year earlier, Perth-based Fortescue said on Tuesday in a statement to the Australian stock exchange. That's below a Credit Suisse Group AG estimate of between 9.5 million tons and 9.6 million tons.
Fortescue is expanding its iron ore output and plans to raise as much as $8.9 billion to fund the new Solomon project close to its existing mine in Western Australia's Pilbara region.
The world's largest iron-ore producers, Vale SA, Rio Tinto Group and BHP Billiton Ltd are moving to quarterly pricing agreements with customers, away from traditional annual contracts.
"Going forward Fortescue's pricing arrangements will be consistent with the industry move to a market-aligned system," the company said on Tuesday. It sold ore at an average of $69 a ton in the quarter, up 19 percent from the December quarter, it said.
Fortescue gained 1.6 percent to A$5.16 ($4.8) at the close on the Australian stock exchange. "I can assure the market that we will not do worse than our competitors" on iron ore pricing, Fortescue's Chief Executive Officer Andrew Forrest said, without providing any outlook.
The company is seeking to ship about 40 million tons this year before an expansion in 2011 intended to boost capacity to 55 million tons a year.
BLOOMBERG NEWS
(China Daily 04/21/2010 page15)
