Leading Australian miner Fortescue Metals Group announced a record 40% decline in annual profits despite skyrocketing shipment of iron ore. The miner has now blamed its performance on the decline in prices of steel-making materials and a drop in demand from China.
Fortescue, owned by top billionaires, including billionaire founder Andrew Forest who owns a 37% stake in the company, announced a net profit after tax of $6.2 billion, a significant drop from the $10.35 billion it made a day ago.
Fortescue reportedly earned an average revenue of $99.80 per dry metric tonne of iron ore this year, a significant fall from the $135.32 DMT earned last year when the company reported record earnings. Additionally, Fortescue announced a final dividend of A$1.21 per share, a significant drop from the A$2.11 per share declared last year.
While Fortescue, the world’s fourth-largest iron miner, announced a 40% drop in profit, the figures were still the second highest since the company was launched.
Miners have struggled to stay above water amid dwindling iron ore prices which have retreated from the peak of 2021. More so, the Covid-19 lockdowns and declining demand in China haven’t helped to boost falling iron ore prices. Rival company Rio Tinto is also struggling with falling iron ore prices as the miner reported a more than 29% drop in profit. The company has blamed its performance on supply chain snags and softening demand from its customers in China.
Declining profits in the mining industry
While most mining companies had a good run last year, they haven’t achieved the same result this year. Although most mining companies have blamed their performance on declining iron ore prices, which failed to capitalize on 2021 gains, other companies have blamed their performance on rising costs and labor shortages.
Although China is working to turn things around within its mining sector by offering stimulus packages, the move has yet to bring concrete results. Miners will now be exploring other frontiers to improve things within the industry.