[ferro-alloys.com]Fortescue Metals Group’s annual profit has slumped 58 per cent, missing estimates, due to declining prices and demand for its iron ore from China.

The world’s fourth-biggest iron ore miner on Monday reported a full-year net profit of $US879 million ($1.2 billion), down from $2.09 billion a year ago, lower than the estimate of $US1.08 billion in a Thomson Reuters poll of 14 analysts.

FMG last year shipped 170 million tonnes of iron ore at a cost of $US12.36 per wet metric tonne C1 cost, a 4 per cent improvement on the previous year.

But revenue fell 18 per cent compared to the previous year, with the drop blamed on high steel mill profitability in China which encouraged use of higher iron content ores to maximise production.

To combat the decline, FMG will introduce a 60 per cent iron content product, named West Pilbara Fines, from the second half of 2018/19 ahead of the development of its $1.3 billion Eliwana mine and rail project.

West Pilbara Fines will be sourced from existing operations and provide customers with a higher-grade product before full-scale production at the higher-grade Eliwana project.

It will initially be produced by blending ore from the Firetail mine with higher iron content ore from newly developed areas to the west of the Cloudbreak mine.

“Development of Eliwana will maintain Fortescue’s low cost position and underpins the long-term production of West Pilbara Fines while providing Fortescue with greater flexibility to capitalise on market dynamics and maintain mine lives,” FMG said.

The miner finished the year with $US863 million cash on hand.

It is tipping exports of between 163mt and 175mt this financial year at costs between $US12/wmt and $US13/wmt C1 costs.

Fortescue declared a final dividend of 12¢ a share, down from 25¢ a share a year ago.

• [Editor:王可]