The Fortescue Metals Group Limited (ASX: FMG) share price has jumped 3% after deliver its best ever half-year operating performance.
Fortescue is a very large iron ore miner and it’s also working on a number of green energy and decarbonisation efforts.
Fortescue’s strong performance to December
Fortescue boasted of its strongest ever quarter of shipments of 49.4 million tonnes, with half-year shipments of 96.9 mt, up 4% year over year.
The average revenue was US$87 per dry metric tonne, yet the C1 (production) costs were US$17.17 per wet metric tonne, was 3% lower than the previous quarter.
Its cash balance increased to US$4 billion, with its net position being net debt of US$2.1 billion) as at 31 December 2022. It spent US$728 million on capital expenditure during the quarter.
Fortescue noted that it has commenced civil works on the installation of the solar far as part of the Pilbara Energy Connect program of works.
One of the highlights for Fortescue Future Industries (FFI) during the period was the establishment of a framework agreement with the government of Kenya to develop green ammonia and green fertiliser facilities.
It also appointed Fiona Hick, who will be the chief executive officer of Fortescue Metals.
Management commentary
Andrew Forrest said a number of things about the business, and I think it’s worth including most of the quote about its growth potential:
We’ve made strong progress on our massive iron ore interest in Gabon, our electrolyser facility in Gladstone, our battery facility in the UK and our green energy projects all over the world. All these assets, some which give us preeminent leadership capability in their industries, have been added through operating cashflow. Despite this major asset growth, cash flows have allowed a strong reduction to our net debt, adding further weight to the existing strength of our balance sheet.
Some 100 meetings at the World Economic Forum in Davos made clear to Fortescue the demand for green energy is immense. This gives us confidence that global capital markets will be aligned to progress five FFI green energy projects to Final Investment Decision in calendar 2023 allowing first production in 2024.
Green hydrogen gives the world energy storage potential of the massive scale of oil, gas and coal. Green electrons are already the world’s lowest cost energy and rely on batteries for firming capacity and energy mobility. Batteries are also fundamental to the rapidly growing global hydrogen fuel cell industry and are therefore one of Fortescue’s preeminent focuses.
The unique technical strength and commercial potential of battery prototype design and maker WAE Technologies in Oxfordshire, will be developed through transitioning from prototype design to manufacturing and distribution of world leading mobile storage systems. Our first manufacturing facility in Kidlington will be commissioned in April. To accelerate and globalise this transition, Mark Hutchinson has been appointed Chairman, tasked with growing WAE into a multi billion dollar green technology, battery and vehicle control systems company.
Final thoughts on the Fortescue share price
It seems that Fortescue shares are doing really well for shareholders and another big dividend could be on the way for 2023. I’m happy as an investor, but I wouldn’t want to buy any more unless the Fortescue shares fell significantly back to under $17. However, it’s pleasing to see the progress that the business is making.
