Fortescue has warned China’s bargaining tactics could force the miner to reduce iron ore operations by the end of the year.
The Pilbara iron ore miner on Thursday confirmed what it had foreshadowed early in October that some of its shipped iron ore remained unsold due to a standoff with state-owned resource buyer China Mineral resources Group.
CMRG has been pressuring WA’s iron ore miners to use China’s price indices and currency for sales contracts, rather than US-based instruments which have been standard practice for decades.
In releasing its September quarter production results, Fortescue said the window for negotiations was closing.
“Product inventory is expected to increase by a further 4 - 5Mt in October 2026 as Fortescue continues to optimise product placement channels,” the miner said.
“If negotiations with CMRG are not concluded by calendar year-end, operations may be affected, potentially including adjustments to production.
“Fortescue continues to engage with CMRG and remains focused on good faith negotiations grounded in fair and proper market practices.”
Fortescue said its production and cost guidance for the financial year were unchanged at this stage.
Higher diesel prices meanwhile have bumped Fortescue’s production costs up by $US1.40/tonne, underpinning the company’s reasoning to eliminate fossil fuel from its operations.
Fortescue metals and operations chief executive Dino Otranto said electric machinery arrivals were a regular sight on site now.
“Our electric excavators are already delivering greater productivity than their diesel equivalents, and we’re applying what we’ve learned as we bring more electric equipment into the fleet,” he said.
“The XCMG electric grader, dozer, loader and water cart have arrived from China, and our first battery electric haul truck is being built in Perth.
“In December, we’ll bring all this equipment together at Flying Fish, our first mine to be decarbonised, and show what the future of mining can look like.”
Fortescue shipped 46.8Mt of ore for the September quarter, down 6 per cent on this time last year.
The mineral resource held at the Blacksmith project Fortescue purchased in 2025 has been increased 153 per cent to 615Mt.
Fortescue’s shares were down nearly 3 per cent by mid-morning trade to their lowest point since June last year.
