The Fortescue Metals Group Limited (ASX: FMG) share price will be on watch today after the release of its second quarter update.
How did Fortescue perform in the second quarter?
Fortescue has continued to impress during the second quarter of FY 2020.
During the December quarter the iron ore producer achieved shipments of 46.4 million tonnes (mt) and cash production costs (C1) of US$12.54 per wet metric tonne (wmt).
The latter was a 4% reduction on the same period a year earlier. Whereas, Fortescue's shipments were up 9% on the prior corresponding period, which helped drive first half shipments to a record 88.6mt.
The average revenue received during the quarter was US$76 per dry metric tonne (dmt). This was a massive 58% higher than the second quarter of FY 2019.
Fortescue's chief executive officer, Elizabeth Gaines, was pleased with the quarter.
He said: "Once again, the Fortescue team has achieved outstanding results demonstrated by multiple records across the operations, including record shipments of 88.6mt during the first half of FY20, while maintaining our industry leading cost position below US$13/wmt."
In light of this strong half, the company has updated its guidance for the full year.
Ms Gaines explained: "Based on Fortescue's strong performance in the first half, we expect shipments to be at the upper end of our guided range of 170 – 175mt and C1 cost guidance is lowered to a range of US$12.75 – US$13.25/wmt."
Pilbara Generation Project.
In addition to its quarterly update, Fortescue announced the US$450 million Pilbara Generation Project.
This is the next stage of its Pilbara Energy Connect program, which complements the US$250 million Pilbara Transmission Project announced in October.
Together, the transmission and generation projects, which total US$700 million, form the Pilbara Energy Connect program of works providing Fortescue with a hybrid solar gas energy solution that will enable low cost power to be delivered to the Iron Bridge operation.
Ms Gaines explained: "Mining is a 24/7 operation and efficient, reliable, competitive energy generation remains an important consideration for the mining sector in Western Australia. The lack of an integrated transmission network in the Pilbara has been a key barrier to entry for large scale renewables and Fortescue's investment will address this issue."
