Much to the relief of its shareholders, the Fortescue Metals Group Limited (ASX: FMG) share price is finally heading in the right direction.
In afternoon trade the iron ore producer's shares are up almost 4.5% to $4.90.
Why has it climbed higher?
This morning Fortescue released details on its FY 2018 Innovation Projects which it expects to improve safety, productivity, and efficiency.
These initiatives include the expansion of its autonomous haulage technology usage at its Solomon and Chichester hubs.
Fortescue has used the technology since 2012 and currently has 56 autonomous trucks in operation at the Solomon hub. Their usage has helped achieve a 20% improvement in productivity.
Management intends to rollout the technology at the Chichester hub and is targeting similarly strong levels of productivity improvements.
Finally, the company is investing in an innovative relocatable conveyor trial at the Cloudbreak mine.
What does this all mean?
Management expects these projects to contribute to sustained productivity improvements across the business, with the reduced haulage costs helping to offset rising strip ratios.
Benefits are expected be partially delivered during FY 2018 and then in full during the following financial years.
Should you invest?
I believe the work that management has done should allow it to continue operating as one of the world's lowest cost seaborne suppliers of iron ore for some time to come.
But ultimately it is the iron ore price which will have the biggest say in the future direction of the shares of Fortescue and its peers Rio Tinto Limited (ASX: RIO), Atlas Iron Limited (ASX: AGO), and Mount Gibson Iron Limited (ASX: MGX).
I'm still reasonably bearish on the iron ore price due to increased stockpiles and low-cost supply, so I plan to hold off an investment for the time being.
But if you feel that the iron ore price has bottomed now, then Fortescue could be one of the best options in the resources sector in my opinion.
