Fortescue Metals Signs Contract to Build Iron Ore Ships
Australia’s third-largest iron ore producer, Fortescue Metals Group, has signed a $275 million contract with a Chinese shipyard to build four specialist iron ore carriers. The deal will allow the company to cut costs and improve efficiencies as prices for the precious metal linger at two-year lows.
The four vessels, which will be much larger than the traditional Cape-size vessels, will be designed specifically for Port Hedland’s shallow harbor and tidal conditions. In addition to being larger, the ships will be capable of carrying 260,000 tons of iron ore, making them the biggest ships servicing the port.
According to Fortescue CEO Nev Power, the vessels will help maximize iron ore export volumes while also lowering freight costs.
"These vessels are a natural extension of our supply chain and will play a significant role in increasing efficiencies at the Port and lowering costs," Power said. "They also reflect and strengthen our close relationship with China, our largest customer."
The construction and delivery of the four ore carriers is expected to be delivered from November 2016 to May 2017.
Earlier this month Port Hedland announced more than one million tons of iron ore had been shipped in a single day, breaking the previous record by more than 160,000 tons.
Iron ore miners including Fortescue, BHP Billiton and Rio Tinto have been battling price slumps as iron ore prices have fallen to the lowest since 2012. The price has now fallen by almost 35 percent since December last year.
Barrick profit beats expectations as copper, gold prices up
Barrick Gold has reported a 78% jump in first-quarter profit, beating analyst expectations thanks to rising gold and copper prices, and said it was on track to meet annual forecasts.
Production in the second half is expected to be higher than the first, the gold miner said, thanks in part to the ramp-up of underground mining at the Bulyanhulu mine in Tanzania and higher expected grades at Lumwana in Zambia, reports Reuters
Barrick’s first-quarter gold production fell to 1.10 million from 1.25 million ounces due partly to lower grades at its Pueblo Viejo mine in Dominican Republic.
Adjusted profit surged 78% to $507mn in the quarter ended March 31, from $285mn a year earlier, and Barrick announced a 9 cent per share quarterly dividend.
Stronger prices helped boost Barrick’s revenue from its copper mines in Chile, Saudi Arabia and Zambia by 31% from the fourth quarter. Overall earnings per share were $0.29, ahead of analysts’ estimate of $0.27.
“We expect a positive stock reaction to the earnings beat and strong cash flow,” said Credit Suisse analysts.
Potential for South Africa merger
Barrick CEO Mark Bristow, who has championed mergers across the gold industry, said he backed the idea of South Africa-listed miners Goldfields and AngloGold Ashanti combining.
Speculation has been swirling around the two companies and Sibanye-Stillwater, whose CEO Neal Froneman floated the idea of a three-way merger.
“I’m a South African, and this country has such a great mining history and it would be great to see a real gold business come out of the many failed discussions that we’ve seen,” said Bristow.
Goldfields declined to comment. In a statement, AngloGold Ashanti said it was focused on delivering on its growth plan to unlock value from its portfolio of gold assets.
Bristow also said he had met with the Democratic Republic of Congo’s new mines minister and other officials and was continuing to work on getting $900mn belonging to its Kibali mine joint venture out of the country.
“We have a solution, it just needs to be sanctioned by the appropriate authorities which haven’t been around for a while,” he said, referring to a recent government overhaul by President Felix Tshisekedi.