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Fortescue doubles its profit to $14 billion on 'outstanding results'

Business

Fortescue Metals Group has more than doubled full-year profit and its final dividend after iron ore production exceeded annual guidance and prices surged in the second half of the year.

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The world’s fourth-largest iron ore miner reported a 2020/21 net profit of $US10.3 billion ($A14.1 billion), a 117 per cent jump from a year earlier.

Revenue for the 12 months to June 30 surged 74 per cent to $US22.3 billion, largely reflecting the 72 per cent increase in the average price it earned for its ore.

“The strong operating performance across our supply chain, along with the successful ramp-up and integration of Eliwana contributed to Fortescue’s outstanding results in FY21,” chief executive Elizabeth Gaines said.

Iron ore prices surged to record levels in May on the back of rising demand for the steelmaking ingredient in China following a government stimulus to offset the impact of the pandemic.

Supply disruptions from Brazil also helped keep prices above $US200 a tonne for months. Prices have since eased but the commodity is still trading at $US159 a tonne in the spot market.

Fortescue declared a final dividend of $2.11 a share, joining its mining peers in showering rewards for shareholders in a bumper year. The final payout was more than double from a year ago, bringing its total dividend to a fully franked $3.58 a share.

The miner has forecast for iron ore shipments in the range of 180-185 million tonnes for the 2021/22 year, close to the 182.2 million tonnes it shipped last year.

However, it expects the cash cost incurred at each processing stage to rise to between $US15.00-$US15.50/wet metric tonne of ore – a hefty rise from $US13.93.

The company also announced it would achieve carbon neutrality by 2030, ten years earlier than its previous target.

It has also set up Fortescue Future Industries to invest in a global green hydrogen and renewable energy portfolio as part of its decarbonisation strategy.

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