The Fortescue Ltd (ASX: FMG) share price is down 1% after the miner released its FY25 second quarter update.
Fortescue is one of the world’s largest iron ore miners, with multiple projects across Australia. It also has a growing presence in green energy production, mainly green hydrogen and green ammonia.
FY25 second quarter update
The ASX mining share reported that in the three months to 31 December 2024, it shipped 49.4mt of iron ore, which was up 1% year on year and 4% quarter on quarter.
It also reported that its hematite C1 (iron ore mining) cost was US$18.24 per wet metric tonne (wmt), which was 10% lower than the first quarter of FY25.
The hematite (iron ore) average revenue for the company was US$87 per dry metric tonne (dmt), which was 85% of the average Platts 62% CFR Index. In other words, Fortescue’s hematite production achieved 85% of the global benchmark for the iron ore market due its lower-grade. It normally does see a discount, but the size of the discount can change.
Fortescue’s new Iron Bridge production, which has a higher grade than Fortescue’s other production, saw revenue of US$117 per dmt.
Cash and assets
Fortescue reported that its cash balance at the end of December 2024 was US$3.4 billion, with net debt of US$2 billion after capital expenditure of US$1 billion in the quarter. The balance sheet is an important element for the Fortescue share price.
The company reported continued progress towards transitioning Fortescue’s diesel mining fleet, with the award of a contract to purchase over 100 pieces of zero emissions heavy mobile equipment from XCMG.
Energy
Fortescue noted it continues to advance its portfolio of green technologies and is “progressing its green energy projects in a disciplined manner”.
The company noted that it received Federal Government support and backing to develop Fortescue Zero’s 6MW fast charger technology which will be used to power the Liebherr battery electric trucks. ARENA awarded A$10 million in funding.
Feasibility studies and planning approvals “continue to progress” for the Holmaneset project in Norway and the Pacem project in Brazil.
Final thoughts on the Fortescue share price
Fortescue is one of the leading operators in the mining space, but its success for the foreseeable future will be dependent on what happens with the iron ore price, which is difficult to predict and reliant on China.
I like to invest in cyclical businesses at/near the bottom and with an iron ore price of above US$100 per tonne, there still seems to be solid support for the company. There could be cheaper opportunities ahead, depending on how things develop in China.
