Shares of Australian miner Fortescue soared over 6% on Monday, as the mining giant reported full-year profits that hit another record high.
Net profit after tax reached $10.3 billion, up 117% from a year ago, the firm said. This is the second straight year of record profits for the company.
Its full-year revenue was $22.3 billion – 74% higher than the previous year.
It will be paying out total dividends of 3.58 Australian dollars per share, an increase of 103% over last year.
The firm’s shares were last up 6.6% on Monday.
Analysts have been bullish on miners, as iron ore prices surged this year, boosting profits for mining companies.
Demand for iron ore has spiked on strong Chinese steel demand — steel is made from iron ore. On the other hand, supply has dropped as the Covid-19 pandemic has affected output in some mines.
China has said earlier this year that it was committed to cutting steel output. But analysts were skeptical, pointing to the strong demand and difficulty of controlling production.
Fortescue’s iron ore mine at Cloudbreak.
Fairfax Media | Getty Images
Fortescue CEO Elizabeth Gaines told CNBC she continues to see “very strong market conditions” for steel demand from China.
“Our view is that construction activity will rebound in the fourth quarter of this year. We’ll continue to see strong construction activities strong investment in infrastructure,” she told CNBC on Monday, referring to economic activity in China.
“We know that China is committed to continuing its pathway of urbanization, which is driving very strong demand for steel,” she added.
In the first half of 2021, Chinese steel mills churned out nearly 12% more crude steel compared to the same period in 2020, according to Wood Mackenzie.
Fortescue will be focusing on green energy, which the CEO said was set to cut costs.
“We’re actually at the forefront of decarbonization, we think that will lower our costs, so we’re doing this also to lower our costs as well as being carbon neutral which we think is a really important initiative,” she said.
Gaines said the firm wants to establish a new export market for green hydrogen, and aims to generate further returns from such investments. Hydrogen is poised to be the next big source of green energy for anything from data centers and heating homes, as well as powering electric vehicles.
In its earnings report, the company said it was revising its target to achieve carbon neutrality by 2030, ten years earlier than the previous target, citing that it had achieved significant progress on decarbonization stretch targets.
China still holds the cards for global supply chains, whether or not Covid lockdowns frust…