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Fortescue boss optimistic of thawing in China-Australia relationship

“Recently we’ve got a new president in the White House as well and I notice President Biden has talked about having strategic patience and adopting a multilateralism approach.

“I think more broadly the signs are more encouraging for some improvements of that relationship.”

Mr Tehan said last week he was not going to put a timeline on repairing the relationship.

While trade tensions have resulted in brutal tariffs and blocks to coal, wine, beef, rock lobster and barley exports, iron ore has so far remained untouched, which has seen Fortescue’s revenue soar.

The company, whose biggest shareholder is billionaire Andrew “Twiggy” Forrest, shipped 46.4 million tonnes of iron ore from the Pilbara in the December quarter, exceeding analysts’ expectations of 44 million tonnes and helping it reach the half year record.

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Revenue per tonne increased 15 per cent compared to the September quarter after hitting an average of $US122 a tonne.

The high price and record shipments were a result of China’s hungry steel industry, which produced a record 1053 million tonnes of crude steel in 2020.

Earlier this month the company revealed it expected to rake in between $4 billion and $4.1 billion over the first half of the financial year.

Ms Gaines and analysts were bullish about continued demand for the commodity.

“We’re not seeing any indication of a slow down in demand,” she said.

UBS resources analyst Glyn Lawcock said the iron ore market would remain tight for 2021 as Chinese steel production rates reach pre-COVID levels and Brazil’s Vale, Australia’s biggest competitor, continues to struggle with supply due to COVID and tailings dam collapses.

Mr Lawcock said iron ore would be a hard commodity for China to target given Australian imports made up more than 60 per cent of their consumption.

FMG’s export guidance remained at 175 million to 180 million tonnes and production costs were expected to sit between $US13 to $US13.50 for the full year assuming the Australian dollar trades at 70 cents against the US dollar.

Fortescue exported a record amount of iron ore in the half year.

Fortescue exported a record amount of iron ore in the half year. Credit:Ian Waldie

The good news was tempered by the company announcing a review of its $US2.6 billion ($3.4 billion) Iron Bridge magnetite project that will assess cost and schedule impacts of the COVID-19 pandemic, the strength of the Australian dollar and access to resources and specialist skills.

Fortescue shares dropped 36 cents, or 1.56 per cent, to $22.73.

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