Like many large firms,Fortescue is tackling inflationary pressures. Extraction costs surged 16 per cent over the year amid diesel price hikes and tight labour conditions. While the lower Australian dollar provided some relief it was not enough to offset the higher costs.
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.
“Our biggest cost driver is fossil fuel,diesel in particular. We’ve mitigated that to a point with gas,but the big one is diesel. And that’s why we actually started the decarbonisation process last year,” Forrest said on Thursday.
Fortescue madeheadlines 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.
“We really think it’s going to shave 20 to 25 per cent off our costs if not a little more,” Forrest said.
He added the miner’s decarbonisation drive is also helping it attract workers who want to make a difference. It got more applicants than available positions during a recruitment drive at the Iron Bridge magnetite project,where first production is on schedule for the March quarter next year.
“We are finding no shortage of labor,but I do think that’s not a fair reflection of the marketplace,it’s Fortescue specific,” Forrest said.