By Melanie Burton and Rishav Chatterjee
MELBOURNE (Reuters) -Fortescue will work with Chinese authorities to resolve the delays keeping some of its iron ore cargoes from clearing customs, a company official said on Thursday.
The comments on the Chinese customs delays came during a conference call discussing the world’s fourth-largest iron ore miner’s quarterly production, which largely met analyst expectations.
Responding to a question on whether the company was expecting more customs checks on its iron ore cargoes to China, Vivienne Tieu, Fortescue’s director of sales, marketing and shipping, said, “We will just work through with the relevant port authorities to understand what they need, such that we clear the cargoes as soon as possible.”
A Reuters report on Tuesday, quoting sources, said two of Fortescue’s iron ore cargoes were facing unusual customs delays at the northern Chinese port of Caofeidian because of inspections for solid waste.
The delays are occurring as Fortescue is negotiating a 2024 procurement deal with state iron ore buyer China Mineral Resources Group (CMRG), which was set up in July 2022 to centralise purchasing and gain more bargaining power with global miners.
Tieu declined to comment on the negotiations because of commercial sensitivities.
Earlier, Fortescue said shipments of iron ore were 48.7 million metric tons in the quarter ending on Dec. 31, bringing first-half shipments to 94.6 million tons, the second highest ever.
Fortescue also trimmed its fiscal 2024 shipments forecast at its new Iron Bridge magnetite project where it needs to replace a leaking high pressure water pipeline for an additional estimated $100 million.
Full-year Iron Bridge shipments are forecast to be 2 million to 4 million tons, down from 5 million tons.
It kept its overall full fiscal-year shipment forecast unchanged at 192 million to 197 million tons.
Shares were up 1.5% at A$28.83 ($18.96) amid strength in major miners.
Prices of the low-grade iron ore that Fortescue mainly produces have been supported as Chinese still mills focus on conserving margins amid lingering weakness in the country’s construction sector.
However, analysts are concerned that weakness will eventually impact the stock price of miners such as Fortescue.
“The valuations of FMG and the other iron ore miners still look rich, especially given the headwinds coming from China,” said Kyle Rodda, senior financial market analyst at Capital.com.
Iron Bridge will allow Fortescue to blend high-grade ore output from the project with its lower grade ore, raising the average iron content above 60%, making it more competitive when compared to BHP Group (NYSE:) and Rio Tinto (NYSE:).
Also on the call, Mark Hutchinson, the CEO of the Fortescue Energy unit, said the company is in talks to potential customers to supply hydrogen from the 80-megawatt electrolyser facility that it plans to build in Texas, capable of producing up to 12,000 tons a year of green hydrogen.
Hutchinson also said final investment decisions on green energy projects in Norway, Brazil and Kenya are being readied.
($1 = 1.5207 Australian dollars)
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