Fortescue: Weaker iron ore prices put huge dent in profit, dividend and green metal plant delayed

Ebbing iron ore prices have resulted in a 41 per cent profit crunch at Andrew Forrest’s Fortescue, as the deadline for one of its leading decarbonisation projects was punted back to next year.

A decline of more than $US18 a tonne for its Pilbara iron ore, combined with $US158 million ($243.7m) worth of writedowns on two canned hydrogen projects, contributed to the lower profit result of $US3.4 billion ($5.2b) for the 2025 financial year.

As a result, the board has drastically scaled back yearly shareholder dividends to $1.10 a share, compared with the $1.97 investors received in 2024.

On those numbers the dividend paid to the Forrest family — which owns 1,131,365,000 shares, or 36.74 per cent of Fortescue — is expected to fall to about $1.24b.

Operationally, the miner delivered another round of record shipments, sending out 198.4 million tonnes and pushing costs down by one per cent to $US17.99 a wet metric tonne.

The average price fetched for a tonne of iron ore fell from $US103.01 to $US84.79 in 12 months.

Output is expected to continue to grow to between 195mt and 205mt for the current year, including higher contributions of up to 12mt of the higher grade Iron Bridge operation.

Barrenjoey’s head of resources research Glyn Lawcock said the result was broadly in line with consensus estimates, but said investors may have been expecting a better dividend.

“(The) FMG result which was largely pre-reported last month with the quarterly production report, so today’s result met market expectations and was again a very clean result,” he said.

“Dividend was in line, although we believe there was some expectation that FMG may pay a little more with the payout ratio dropping back to 65 per cent from 70 per cent last year.”

On the energy side Fortescue has had something of a tumultuous year, with its division chief Mark Hutchinson exiting earlier this year and the business forced to abandon a green hydrogen project in Queensland and Arizona in the US.

As Fortescue’s executive chairman, Mr Forrest addressed setbacks facing the hydrogen sector, saying it remains “critical to our future”, but confirmed the economics against fossil fuels were still not stacking up.

“Its day is coming, and we will be able to switch on as much energy as we need without harming the planet and without making despots who invade other countries using energy as a weapon, richer,” he said.

“When the cost of producing green hydrogen inevitably reaches parity with fossil fuels, Fortescue will be ready.”

It had been hoped construction of a hydrogen-powered green metal plant at the miner’s Christmas Creek hub would be completed before the end of 2025. That has been pushed back to next year, according to the annual report.

“Using hydrogen produced at our existing hydrogen facility at Christmas Creek, annual production is expected to be more than 1500t, with first production anticipated in 2026,” the report said..

The miner is the most bullish of the iron ore majors in trying to produce low emissions-made steelmaking precursor products.

Fortescue’s newly appointed energy chief executive Gus Pichot, who took over from Mr Hutchinson in the middle of a review into the company’s current list of projects, said the division had been “refining and refocusing our growth strategy to be even more disciplined and commercially focused.”

“Green energy and green hydrogen remain key to our future, including our green iron strategy. Construction of our Green Metal Project in the Pilbara is under way and the pilot plant will soon begin producing green iron using green hydrogen,” he said on Tuesday.

Last year the miner had been producing about 530kg a day of hydrogen from a liquefied and gaseous hydrogen plant at Christmas Creek.

For the coming year Fortescue has allocated between $US900m and $US1.2 billion on decarbonising its iron ore operations. The miner wants to hit zero scope 1 and 2 emissions by 2030.

Shares in Fortescue were down 2.7 per cent during early trade to $19.46.