Insight
| |
2 Pages

FMG site tour: breakeven cost reduction is sustainable


FMG site tour: breakeven cost reduction is sustainable

Report summary

Fortescue Metals Group's (FMG) US dollar cash cost reductions achieved in 2015 are mostly sustainable. The drop in FMG's costs is because of a number of factors - weaker Australian dollar, lower oil prices, lower freight costs, increased volumes, and improvements to the wet ore processing facilities (OPF). The modifications to FMG's wet OPF's are most interesting as they have enabled FMG to mine and process lower grade ore while increasing mass recovery and maintaining product grades. The ability to mine lower grade ore allows FMG to use larger and lower cost truck and excavator equipment as it no longer needs to selectively mine high grade ore. Having said that, we do expect costs to creep higher because of rising strip ratios and longer haul distances. Combined with our forecast of higher oil prices, we are anticipating FMG's breakeven costs will rise between 2016 and 2019 at a rate similar to cost increases throughout the industry as a whole.

What's included?

This report includes 1 file(s)

  • FMG site tour: breakeven cost reduction is sustainable PDF - 279.67 KB 2 Pages, 0 Tables, 1 Figures

Description

This Metals Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.

For industry participants and advisors who want to look at the trends, risks and issues surrounding this topic, this report gives you an expert point of view to help inform your decision making.

Our analysts are based in the markets they analyse and work with high-quality proprietary data to provide consistent and reliable insight.

We provide unique in-depth analysis of the metals supply industry so you can make confident strategic decisions.

  • Processing plant improvements will help sustain FMG's cost reductions
  • FMG has limited options for more cost savings at its mines
  • FMG valuation increased because of lower long-term costs

In this report there is 1 table or chart, including:

  • Processing plant improvements will help sustain FMG's cost reductions
    • Fortescue Metals Group CFR China breakeven costs (US$/tonne, 62% Fe basis, real 2015)
  • FMG has limited options for more cost savings at its mines
  • FMG valuation increased because of lower long-term costs
Requester's name : .............
Department : .............
Authoriser's Name : .............
Authoriser's signature : .............
Date : .............
Cost Centre : .............

Questions about this report?

Frequently Asked Questions

Mailenquiries@woodmac.com
  • Europe: +44 131 243 4699
  • Americas: +1 713 470 1900
  • Asia Pacific: +61 2 8224 8898
contact us

Why Wood Mackenzie?

Wood Mackenzie, a Verisk Analytics business, has been a trusted source of commercial intelligence for the world's natural resources sector for more than 40 years, empowering clients to make better strategic decisions with objective analysis and advice.

We work across every sector of oil, gas, power, renewables, chemicals, metals and mining, covering more than 150 countries. Our proprietary data and models are at the core of everything we do, ensuring our independent asset and company valuations are thoroughly robust and that we offer an accurate forward-looking view of economic indicators such as market supply, demand and price trends.

Our 500+ analysts are based in the regions they cover, cultivating an unrivalled depth of understanding to help clients accurately identify new opportunities, define their strategy and improve business performance.

At every stage, our teams readily collaborate and share their insight to provide an integrated perspective across entire industries. It is this unique and rigorous analytical approach that ensures we are recognised as the industry standard by the world’s most innovative organisations.