Fortescue Metals: how well is the company positioned to weather future industry disruption?

Fortescue Metals, a mining company based in Australia, has a relatively high chance of benefiting from its investments in a series of technological, macroeconomic, and sector-specific investments in recent years, according to analysis from GlobalData.

Powered by 

The company was ranked first out of 50 in a ranking of overall leadership in the 10 themes that matter the most to the mining sector.

These themes, which can be defined as any issues that keep CEOs awake at night, describe technological, macroeconomic and industry-specific challenges that companies are currently facing, as well as the opportunities they create. GlobalData’s Thematic Research ecosystem identifies and tracks these challenges, and how they create the long-term winners and losers of the mining industry.

Fortescue Metals received the top mark of five for seven of the 10 themes identified as the most important to the mining sector in the GlobalData Thematic Scorecard – Internet of Things, Autonomous Vehicles, Capital Raising, ESG, Climate Change, Commodity Markets, and Workplace Safety – indicating that it is a dominant player in those categories. Fortescue Metals received a high mark of four for its performance in Covid-19; a mark of two for M&A; and a low mark of one for Lithium-Ion Batteries.

The interactive graphic below allows you to compare Fortescue Metals to the ratings of other mining companies across the 10 themes in question. The higher up a company is on the list, the better positioned it is to weather disruption in the future, while the companies at the bottom are more vulnerable to disruptive threats.

Fortescue Metals Group Ltd. (Fortescue) explores and develops of mineral resources. It operates in Solomon Hub in the Hamersley Ranges and Chichester Hub in the Chichester Ranges.

As of June 2020, the company’s total proved and probable reserves stood at 2,288 million tons (mt) at an average iron (Fe) grade of 57.5%. It had proved reserve of 816 mt and probable reserve of 1,471 mt.

The Chichester Hub in the Chichester ranges, includes Cloudbreak and Christmas Creek mines, has an annual production capacity of 100 mtpa from three ore processing facilities (OPFs). The Chichester Hub’s proved and probable reserve stood at 1,318 mt at an average Fe grade of 57.4%. The Solomon Hub in the Hamersley ranges is located 60 km north of Tom Price and 120km to the west of Chichester Hub. It comprises the Firetail and Kings Valley mines with production capacity of 70 to 75 mtpa. The Solomon Hub’s proved and probable reserve stood at 768 mt at an average Fe grade of 57.2%.

Fortescue operates its purpose built and designed rail and port facilities to deliver iron ore from its mines to Port Hedland and on to its customers. It covers 620 km of track. The port has five operating berths and is capable of efficiently exporting more than 170 mtpa. The company is developing Eliwana mine and rail project. The company continued to assess exploration and development opportunities throughout South America including Ecuador, Colombia and Argentina. The proved and probable reserve of Eliwana stood at 202 mt at an average Fe grade of 60.1%.

In FY2020, the company mined a total of 207 mt of iron ore and processed 177 mt of iron ore. It shipped 168 mt of iron ore in FY2020.

In FY2020, the sale of iron ore reported revenues of $8,786 million, which accounted for 88.17% of the company’s revenue followed shipping with 11.81 and other with 0.02%.

Geographically, the company generates revenue from two regions, namely, China and Other. In FY2020, China accounted for 92.9% of the company’s total revenue, followed by Other with 7.1%.