Fortescue Metals Group delivered record iron ore shipments in FY25 alongside a rare cost decline, while recalibrating its green energy ambitions and maintaining a strong financial position.
- Record FY25 iron ore shipments of 198.4 million tonnes, up 4%
- Hematite C1 costs fell 1% to US$17.99/wmt, first annual decline since FY20
- Iron Bridge project ramp-up on track for 22Mt capacity by FY28
- Discontinuation of Arizona Hydrogen and PEM50 projects with US$150 million write-down
- Strong cash balance of US$4.3 billion and net debt reduced to US$1.1 billion
Record Production and Operational Excellence
Fortescue Metals Group has capped FY25 with a milestone achievement – record iron ore shipments totaling 198.4 million tonnes, a 4% increase over the previous year. The company also set a quarterly shipment record in Q4 with 55.2 million tonnes, underscoring robust operational execution across mining, processing, rail, and shipping. This performance was delivered despite challenging weather events, highlighting Fortescue's resilience and supply chain reliability.
Notably, Fortescue achieved a rare annual reduction in Hematite C1 costs, down 1% to US$17.99 per wet metric tonne, marking the first decline since FY20. This cost efficiency reinforces Fortescue's position as one of the industry's lowest-cost producers, a critical advantage amid fluctuating commodity markets.
Iron Bridge Project and Future Growth
The Iron Bridge project continues its staged ramp-up, with Fortescue targeting a nameplate capacity of 22 million tonnes per annum by FY28. In FY25, Iron Bridge contributed 7.1 million tonnes in shipments, reflecting a significant 48% increase in ore mined year-on-year. This ramp-up is pivotal for Fortescue’s growth strategy, promising to bolster production volumes and diversify product offerings.
Strategic Shift in Green Energy Initiatives
Fortescue is recalibrating its green energy portfolio, discontinuing the Arizona Hydrogen Project in the US and the PEM50 Project in Australia. These decisions, driven by a sharpened focus on commercial viability, resulted in a preliminary pre-tax write-down of approximately US$150 million. Despite these setbacks, the company remains committed to decarbonisation, advancing projects such as the completion of a transmission line between Solomon and Eliwana and deploying its first electric drill rig.
CEO Growth and Energy Gus Pichot emphasized the company’s disciplined approach to growth, balancing innovation with financial prudence. Fortescue’s green energy pipeline continues to evolve, reflecting global market conditions and policy environments.
Financial Strength and Board Updates
Fortescue’s financial position remains robust, with a cash balance of US$4.3 billion and net debt reduced to US$1.1 billion as of June 30, 2025, following capital expenditure of US$3.9 billion in FY25. This strong liquidity provides a solid foundation for ongoing investments and operational flexibility.
The company also announced key leadership changes, appointing Gus Pichot as CEO Growth and Energy to spearhead green energy development, and welcoming Yasmin Broughton to the board as a Non-Executive Director, signaling a continued focus on governance and strategic oversight.
Looking Ahead – FY26 Guidance
Fortescue’s FY26 guidance projects total shipments between 195 and 205 million tonnes, including 10 to 12 million tonnes from Iron Bridge. Hematite C1 costs are expected to rise modestly to between US$17.50 and US$18.50 per wet metric tonne, factoring in labour and mine plan impacts balanced by cost management initiatives. Capital expenditure remains significant, with US$3.3 to US$4.0 billion allocated to metals projects and approximately US$300 million earmarked for energy initiatives.
Bottom Line?
Fortescue’s record-breaking production and prudent green energy pivot position it well for sustainable growth amid evolving market dynamics.
Questions in the middle?
- How will the ramp-up of Iron Bridge impact Fortescue’s overall cost structure and margins?
- What are the long-term implications of discontinuing the Arizona Hydrogen and PEM50 projects on Fortescue’s green energy ambitions?
- How might fluctuating AUD, USD exchange rates influence Fortescue’s FY26 cost guidance and profitability?