The volume play is one many of Australia’s miners have been implementing over the past 12 months.
With iron ore dropping below the $US100 a tonne mark – and stubbornly staying there – since earlier this year, boosting tonnes shipped and cutting costs is one way to deal with lower commodity prices.
Today, iron ore miner Fortescue Metals Group posted its FY14 results, recording a record net profit of $2.73 billion, up 56% year-on-year.
The chart below from the company’s financial presentation shows how increasing shipping volumes gave the company the benefit of scale, with cost per tonne falling, releasing some margin pressure and lifting the miner’s profits. It shows the volume increases more than offset the recent iron ore price fall.
It’s also an important feature of the Australian economy at the moment. While the peak of the mining investment boom is behind us, the increased capacity shows that mining is still going to be an important contributor to the economy in the years ahead.
Overnight September 62% Fe Iron Ore futures were down 0.08% to $92.25 a tonne.
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