Fortescue warns of Pilbara iron ore production slowdown as talks with China Mineral Resources Group drag on

Fortescue’s sale of the steelmaking commodity that powers the Australian economy have fallen as the Andrew Forrest-controlled miner remains locked in talks with China Mineral Resources Group.

That has forced the iron ore major to warn of a slowdown in production if negotiations with the state-backed buyer are not wound up by the end of 2026.

The Pilbara powerhouse on Thursday confirmed iron ore sales of 42.9 million tonnes in the first quarter were below shipments as it continued talks with CMRG, which has been squeezing WA producers for better deals.

Fortescue produced 62.7mt in the three months, down 3 per cent from the previous quarter but up 4 per cent on a year ago.

Total shipments were 46.8mt, 6 per cent lower than a year ago.

In an usual step, Fortescue had already flagged the sales blow earlier this month in a preliminary report.

It pinned the fall on maintenance and a scheduled port outload shutdown, while stating that ore stocks across the supply chain remained healthy.

CMRG has reportedly ordered Chinese steel mills to stop buying a low-grade Fortescue iron ore product amid tense negotiations over future pricing.

The group — a procurement agency created by Beijing to consolidate the purchasing power of China’s steel mills in an effort to keep a lid on iron prices — has recently flexed its muscle to cut deals with rivals BHP and Rio Tinto.

Fortescue hinted in its September-quarter report there was no expectation of an immediate resolution.

“If negotiations with CMRG are not concluded by calendar year-end, operations may be affected, potentially including adjustments to production,” it said.

Like Rio Tinto, Fortescue warned that higher diesel costs as a result of the US war with Iran in the Middle East were driving up production costs.

The price of the fuel pushed unit costs to $US21.98 per wet metric tonne — up 13 per cent from the previous quarter and 21 per cent from $US18.17/wmt a year ago.

Rio last week warned investors it was facing extra full-year costs of $530 million if oil pr-ces remain evelated for the rest of calendar 2026.

Fortescue achieved an average realised price of $US80/t for its iron ore.

“We shipped 46.8mt of iron ore in Q1, including 2.5mt from Iron Bridge,” said Fortescue Metals and Operations chief executive Dino Otranto said.

“That’s a solid result, especially with our teams carrying out our biggest-ever shutdown across port operations.”

More to come...