Fortescue: A Record Year Amid Growing Quality Pressure
Fortescue closed the 2026 fiscal year with a new shipment record. In total, the Australian commodities group shipped 201.3 million metric tonnes of iron ore. In the final quarter, shipments reached 52.7 million metric tonnes, exceeding market expectations despite a year-over-year decline. Cash and cash equivalents rose to USD 5.1 billion as of June 30. For 2027, Fortescue projects shipments of 197 to 207 million metric tonnes.
However, the figures also highlight the challenges. Production costs for hematite rose by 6% over the full year to USD 18.74 per metric tonne and are expected to increase to between USD 20.50 and USD 21.75 in 2027. In addition, a USD 525 million impairment charge is weighing on the delayed Iron Bridge project. This magnetite mine, in particular, is strategically important because its concentrate has a significantly higher iron content than Fortescue’s traditional products.
The company must therefore tackle two challenges simultaneously. First, maintaining the enormous cost and logistical strengths of its Pilbara business, and second, further developing its portfolio toward higher-grade ores. This is because direct reduction processes currently often require iron grades of around 67%, while many Australian hematite products fall below this threshold.
Fortescue is therefore investing not only in Iron Bridge but also in processes for lower-emission iron and steel production. In the short term, Chinese price negotiations, rising costs, and the project’s ramp-up phase remain risks. In the long term, however, the group has the scale, infrastructure, and financial strength to actively help shape the transformation of the steel industry.
Strategic Resources: Billion-Dollar Project Takes Shape
The decarbonization of the steel industry presents Strategic Resources with an extraordinary market opportunity. With the BlackRock project in Québec, the company is developing an integrated value-creation platform for high-quality iron ore, vanadium, and titanium. At its heart is a pelletizing plant at the deep-water port of Port Saguenay, whose capacity is to be expanded to 4 million metric tonnes of DR-grade pellets per year following approval. The environmental documents submitted for this project are currently undergoing final review. DR pellets with an iron content of more than 67% are considered a key raw material for low-carbon direct reduction and also benefit from the European Carbon Border Adjustment Mechanism (CBAM).
Strategic Resources is pursuing far more than a traditional mining model. The fully approved BlackRock project combines mining, processing, and port infrastructure into an integrated supply chain. The mine has an approved operating life of 39 years and, in addition to iron, also produces the critical metals vanadium and titanium. Thanks to an existing rail connection, affordable hydropower, and a natural gas connection, the project enjoys structural cost and emissions advantages. At the same time, the Government of Québec supports the project not only as a shareholder but also through extensive infrastructure investments.
The project’s economic viability is also compelling. For BlackRock, the feasibility study shows a post-tax net present value of approximately CAD 1.93 billion with an internal rate of return of 18.2%. Proven and probable reserves total 127.8 million metric tonnes, while the total measured, indicated, and inferred resource is significantly higher. The project also has significant expansion potential.
At the same time, Strategic Resources is expanding its international presence. The Mustavaara project in Finland has been included in the EUR 17 million FutSteel research program with SSAB, which aims to advance hydrogen-based steel production. In addition, the company is collaborating with Tyfast Energy to establish a Canadian vanadium battery value chain. Given a market capitalization of approximately CAD 16 million, the company appears to have remarkably significant upside potential relative to the project’s value and its strategic importance for the Western world’s supply of critical raw materials and green steel.
Rio Tinto: The Iron Ore Giant Reinventing Itself
Rio Tinto achieved a significant jump in earnings in the first half of 2026. Adjusted EBITDA rose by 28% to USD 14.8 billion, while free cash flow climbed by 75% to USD 3.8 billion. Adjusted net income rose by 43% to USD 6.85 billion. Shareholders will receive an interim dividend increased by 43%, totaling USD 3.4 billion.
Of particular note is the shift within the portfolio. Copper, aluminum, and lithium now account for more than half of earnings. This reduces dependence on the traditional iron ore business, whose EBITDA declined slightly despite the highest Pilbara production in a first half-year since 2018. Productivity measures have already yielded benefits of USD 870 million for Rio, and an annualized improvement of USD 1.8 billion is expected to be achieved by year-end.
Iron ore remains the foundation, however. Simandou in Guinea is particularly important. Once fully operational, the project is expected to deliver up to 120 million metric tonnes annually and features higher-grade ore than many Australian deposits. Despite new projects, Rio anticipates a supply shortfall of approximately 650 million metric tonnes by 2035, as numerous existing mines are aging and India and Southeast Asia are expanding their steel production capacities.
At the same time, Rio is working with partners on NeoSmelt. The technology is designed to make even lower-grade Australian ore usable for lower-emission iron production. This combination of premium ore, technical adaptation, and a growing copper and lithium business makes the company more resilient.
Rio Tinto has thus long been more than just a bet on Chinese construction growth. The company combines traditional steel demand with data centers, power grids, and electrification, while also possessing the financial resources to build out the next generation of commodity supply.
Fortescue defends its position through massive volumes, low costs, and the expansion of high-quality magnetite products. Strategic Resources is focusing specifically on DR pellets and could thus serve a rapidly growing premium segment. Rio Tinto, in turn, combines its strong iron ore foundation with Simandou as well as growing copper, aluminum, and lithium businesses. The steel transition is not a sure thing, but the race for higher-quality ores is opening up new opportunities.
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