Forrest makes green plea as Fortescue delivers record iron ore quarter

Mining boss Andrew ‘Twiggy’ Forest is pushing for global green energy subsidies as his iron ore machine Fortescue delivered record first quarter shipments of the key steelmaking mineral.

Fortescue Metals Group said in a quarterly update on Thursday it had a strong start to the financial year, mining 47.5 million tonnes of ore from its West Australian Pilbara operations.

Andrew Forrest is pushing governments for more green energy subsidies at next month’s United Nations climate change conference COP27.Credit:Bloomberg

But like many large firms, Fortescue is facing inflationary pressures.

Extraction costs surged 16 per cent over the year amid diesel price hikes and tight labour conditions. The miner gained some relief from the lower Australian dollar but not enough to offset the increases.

Fortescue is being wedged between rising costs and falling ore prices. Average revenue of per tonne in the quarter was $US87.43. Between the end of June and end of September, the Platts benchmark ore price fell from $US120.10 a tonne to $US95.95 a tonne.

Iron ore, a key ingredient in steelmaking, is Australia’s most lucrative commodity worth $133 billion in overall export earnings in the past financial year. Robust demand from China pushed benchmark iron ore prices to a record high of $US230 a tonne last year. Prices have since cooled as China’s economy slows.

Forrest, one of the industry’s biggest champions of climate change initiatives, said Fortescue will follow up its September announcement – where it committed to eliminate fossil fuel use from its business – by pushing governments for more green energy subsidies at next month’s United Nations climate change conference COP27.

Fortescue made headlines last month when it promised to spend $9.2 billion to eliminate emissions from its mining operations and supply its customers with a carbon-free product by 2030, a shift it maintains will save the company $1.2 billion a year.

Forrest said governments must help business with green energy subsidies.

“The acceleration of the energy transition for the resources industry requires subsidies for green energy globally. This will be a core message we will take to COP27 next month to help enable other companies to join us,” he said.

Guidance for ore shipments, costs and capital expenditure for this financial year remains unchanged.

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