Australia's iron ore market future under threat as Fortescue delivers record shipments

Australian mining giant Fortescue achieved record iron ore shipments in the first quarter of fiscal 2023. It shipped 47.7 million tons in the July-September period, a 4% increase on the same period last year.

Fortescue also recorded a 2% increase in iron ore production to 57.1 million tons. The company's Iron Bridge project in Western Australia began production in May 2023 and its strong performance contributed to these results. Iron Bridge is planned to operate solely on renewable energy until 2030.

This strong start comes after Fortescue missed its iron ore shipment forecast last year, coming in at 191.6 million tons. The company now forecasts shipments of 190-200 million tons in 2024/2025.

The results were released at a time when China continued to increase its iron ore imports despite decreasing steel production. China's iron ore imports are expected to hit record highs in October.

Fortescue also signed a US$2.8 billion agreement with Liebherr Mining to make its iron ore operations completely zero-emission by 2030.

Fortescue CEO Dino Otranto said Australia risked losing its global dominance in the iron ore market. Speaking at the IMARC conference in Sydney, Otranto said that if the country did not move quickly on green iron production, steelmakers would turn to alternative suppliers, which would hurt Australia's biggest export revenue.

Australia accounts for about half of the world's iron ore supply, but the quality of ore mined in the Pilbara region is considered too poor to be made into steel without the use of coal. Otranto highlighted the possibility of steelmakers turning to suppliers outside Australia in the decarbonization process, saying that competition has increased with green steel projects in the Middle East and the commissioning of Guinea's Simandou mine. Simandou's high-quality iron ore will be shipped directly to China, he said.

Otranto said Australia's nickel industry needs to learn from lost opportunities to Indonesia, and a similar situation could occur in the iron ore sector. Noting China's leadership in the fast-growing production of green technology, Otranto emphasized that Australia should invest more in this area.

Fortescue emphasized the importance of government and industry collaboration for Australia to maintain its importance in the global iron ore supply as it takes steps to produce green iron using green hydrogen.