The falling Aussie dollar and plummeting oil price have provided some much needed relief to Fortescue Metals Group which this morning released its December quarter results.
In the three months to December 43.6 million tonnes of iron ore was mined, up 2% on the previous quarter.
The falling Aussie dollar and oil price over the period provided some relief to the miner which is operating in an environment where commodity prices are falling. Fuel and energy costs make up about 12% of total C1 costs and also have an impact on the costs of shipping.
Over the December quarter iron ore averaged $US74/dmt, over the same period Fortescue said its realised price was $US63/dmt.
Fortescue said the full impact of lower oil prices which have dropped 50% in the past six months and more favourable foreign exchange conditions will flow into its costs during the March quarter.
Investors were looking for improved price realisation in the report and more clarity on capex.
Capex for FY15 was reduced to $US650 milion from $US1.3 billion.
“Fortescue’s strong operational performance continued in the December 2014 quarter with C1 costs decreasing by 11% to $US28.48/wmt. During the quarter shipments remained steady,” the miner said.
“Sustainable cost reductions result in C1 guidance for the second half of FY15 being revised down to $US25-26/wmt reflecting the improvement in operating performance, foreign exchange rate and fuel price.”
Over the period Fortescue paid $US500 million off its debt, reducing gross debt to $US9.1 billion. Fortescue has paid $US3.6 billion off its debt since November 2013.
The report showed shipments remained steady over the period with 41.1 million tonnes of ore exported, down 1% quarter-on-quarter.
Fortescue averaged 72 shipments a month over the December quarter, with product delivered to China, Korea, Japan and India.
In 2014 China imported a whopping 933 million tonnes of iron ore, a 13% increase year-on-year. Australia’s major iron ore producers, including BHP Billiton and Rio Tinto, have all boosted production over that period.
This morning Fortescue shares were trading up 4.41% to $2.130.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.