Fortescue Metals Group (ASX: FMG) is on the right track to achieve its production goal of more than 155 million tonnes per annum through project expansions, with production in the September 2011 quarter up 30% on 2010.
Production for the period reached 12,716,550 tonnes of ore, up 30.4% on the 9,750,126 tonnes produced in the corresponding quarter in 2010,
Fortescue achieved a 55 million tonne per annum run rate through August and September across its integrated mine, rail and port operations.
Despite continuing construction activities across the port, rail and mine sites, volumes are forecast to increase over the December Quarter. Fortescue plans to sustain the 55 million tonnes per annum run rate for the entire quarter to achieve shipments in the range of 13.5-14 million tonnes.
The average cash cost was also lower in the September quarter, falling 6.5% on the July 2011 quarter to US$49.78 per tonne. Key areas of improvement were operating efficiencies of scale, given an increase in Fortescue tonnes shipped (12.36 million tonnes), and a slightly lower strip ratio.
Feasibility study work has continued to confirm the best sequence of developments to follow the T155 expansion projects currently under construction in Western Australia’s Pilbara region.
At the Christmas Creek project, phase two expansion is on schedule, targeting first production of ore from the expanded plant in September 2012. The budget has been revised down by US$200 million to US$1.1 billion following a scope change.
Christmas Creek will be expanded from 55 million tonnes per annum to 95 million tonnes per annum.
The Port expansion also remains on schedule, with the team ready to begin commissioning the second outload circuit during the December quarter 2011, giving installed outload capacity of 95 million tonnes.
Fortescue is aiming to expand the Port project from 55 million tonnes per annum to 155 million tonnes per annum.
The company had cash in hand at the end of September of US$2.1 billion.