Fortescue Metals Group is facing rising production costs along with the rise of the Australian Dollar. The Chief Financial Officer of Fortescue, Stephen Pearce said that the strengthening Australian dollar has continued to have an impact over the quarter, given that approximately 70 per cent of the operating costs are in Australian dollars.
The third largest iron ore miner in Australia reported that despite a 9 % fall in shipments the tonnes shipped were more than the initial guidance. With the US Dollar to Australian Dollar exchange rate averaging 91c in September as compared to 88c average in the last quarter, production costs were higher.
As per Mr Pearce, the scheduled maintenance shuts and the rising dollar both affected the production costs to the tune of $1 per tonne in the September quarter as compared to the June quarter production costs.
The group is now implementing initiatives to offset the surge in the dollar to take out some of the exchange range pressure. Net profit for the Perth based company in the year ending June 30, 2011 may be estimated at $1.634 billion.