Fortescue’s Green Transition Faces Capital and Regulatory Challenges Ahead

Robust Financial Performance

Fortescue Metals Group has delivered a strong financial and operational performance for the fiscal year ended June 2025. The company shipped a record 198.4 million tonnes of iron ore, underpinning a net profit after tax of US$3.4 billion. This result reflects disciplined cost control and operational efficiency, with an industry-leading hematite C1 cost of US$17.99 per wet metric tonne, positioning Fortescue competitively in the global iron ore market.

Underlying EBITDA reached US$7.9 billion, supported by a 51% margin and solid revenue realisations averaging US$85 per dry metric tonne. Fortescue’s robust cash flow generation enabled a free cash flow of US$4.3 billion, reinforcing the company’s strong balance sheet and capacity to fund growth initiatives.

Shareholder Returns and Capital Discipline

In line with its dividend policy, Fortescue declared a fully franked final dividend of A$0.60 per share, culminating in total FY25 dividends of A$1.10 per share and a payout ratio of 65%. The company continues to balance rewarding shareholders with maintaining financial flexibility, targeting a gross debt to EBITDA ratio below 2x and gearing under 40%.

Capital expenditure for FY25 was US$3.9 billion, focused on sustaining operations and hub development, with guidance for FY26 set between US$3.6 billion and US$4.3 billion. This disciplined approach supports ongoing exploration and development projects both in Australia and internationally, including the Iron Bridge project and the Belinga iron ore deposit in Gabon.

Advancing Decarbonisation and Green Metal Initiatives

Fortescue’s commitment to sustainability remains a core strategic pillar. The company aims to eliminate Scope 1 and 2 emissions from its Australian terrestrial iron ore operations by 2030, eschewing voluntary carbon offsets. Progress includes deploying an electric mining fleet, constructing a unified power network with 460 km of high voltage transmission lines, and advancing solar farm projects, including a 190MW solar farm under construction.

The Green Metal Project, Fortescue’s flagship initiative, integrates renewable energy and green hydrogen to pioneer commercial-scale green metal production in the Pilbara. This project exemplifies Fortescue’s ambition to lead the global energy transition while maintaining profitability.

Outlook and Strategic Focus

Looking ahead, Fortescue has provided FY26 guidance for iron ore shipments between 195 and 205 million tonnes, with hematite C1 costs expected in the range of US$17.50 to US$18.50 per wet metric tonne. Capital expenditure will continue to support growth, innovation, and decarbonisation efforts.

Exploration activities remain active across multiple jurisdictions, including Australia, Gabon, Argentina, Kazakhstan, Latin America, and Canada, reflecting Fortescue’s strategy to diversify its resource base and product mix. The company’s focus on safety, diversity, and community engagement further underpins its sustainable growth model.