Fortescue Metals Group says its exports will continue to grow, despite lower iron ore prices and global jitters about a slowdown in China.
Fortescue added that it could seek as much as $1 billion in short-term funding as it pushed towards targets of 95 million tonnes by the end of 2012 and 155 million tonnes by June, 2012.
The Pilbara iron ore miner produced record fourth quarter volumes within its full year guidance and said it does not see any major change to its level of demand from China.
Fortescue chief executive Nev Power said he continued to be confident in China’s ability to show discipline in managing its massive economy.
“That gives us a lot of confidence that they’ll continue to do that,” Mr Power told a media briefing on Tuesday.
While China’s second-quarter growth fell to a three-year low of 7.6 per cent, it was a strong result given the issues in Europe and the rest of the world, Mr Power said.
He said Chinese steel production of more than two million tonnes a day in June was extremely strong.
“We’ve seen a number of new steel mills that have been approved for construction in China, so while we acknowledge that there are some issues in terms of steel pricing and steel demand in China in the short-term, in the longer-term, and in fact the medium term, we don’t see any major issues.”
Fortescue reported record shipments in the June quarter as it lifted its full year sales by 40 per cent to 55.8 million tonnes (mt) for the 2012 financial year.
It intends to maintain its production rate at around 60mt a year for the September 2012 quarter.
Routine maintenance undertaken in early July 2012 would ease production from the record June quarter followed by a substantial ramp-up of production through the December 2012 quarter.
Platypus Asset Management resources analyst Anna Kassianos said Fortescue’s operating costs were now one of the best in the industry and it was looking at using increased capacity vessels to transport more product.
“There’s some conservatism in their ramp up for eventually getting to 155 mt in the years to come, and that’s more of a port issue as opposed to expansion project challenges given the orebody is simpler to develop,” Ms Kassianos said.
“That’s not a function of China.”
She expects more of the same in the first half, with increased tonnage in the second half.
In contrast to some of its competitors, Fortescue says it is having no difficulty employing people from within Australia to add to its 4,000-strong workforce, even with wage inflation about five to six per cent.
There have been a small number of technical people recruited outside of Australia but the company said it had no plans to recruit overseas.
Fortescue shares closed two per cent lower at $4.54.
