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Australia's Fortescue says H1 profit slumped by a third as costs weigh

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·2-min read
FILE PHOTO: The logo of Australia's Fortescue Metals Group can be seen on a bulk carrier as it is loaded with iron ore at the coastal town of Port Hedland in Western Australia
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(Reuters) - Australia's Fortescue Metals, the world's fourth-largest iron ore miner, on Wednesday said first-half profit tumbled a third on higher material and labour costs and lowered its interim dividend, sending its shares more than 4% lower.

Fortescue said costs for the half jumped by a fifth. Australian miners have been burdened by a shortage of workers in resource-rich Western Australia state due to lockdowns and border closures to control a recent wave of Omicron COVID-19 infections.

The miner posted an underlying net profit of $2.78 billion, compared with $4.08 billion a year earlier, but reiterated its full-year forecast of shipments, costs and capital expenditure. Analysts expected a profit of $2.70 billion, according to Vuma Financial.

"We remain focused on managing industry cost pressures and challenges posed by Western Australia's ongoing border restrictions," Chief Executive Elizabeth Gaines said.

"We are working closely with the Western Australian government and relevant authorities to ensure we have access to the specialist skills required."

Fortescue declared an interim dividend of 86 Australian cents per share, compared with A$1.47 per share a year earlier.

Its shares fell as much as 4.5% to A$20.61, trailing the broader market which gained 0.4%.

GRAPHIC: Fortescue half-year profit -

China's push to curb emissions and easing construction activity in its debt-laden property sector has led to prices of the steel-making commodity halving from record levels last year.

Analysts expect iron ore prices to stabilise this year, but remain some way away from last year's peak. BHP Group said on Tuesday commodity price volatility will continue for some time, though outlook for demand and pricing remains strong.

Fortescue also said its Iron Bridge magnetite project was progressing well, with first production scheduled in December.

(Reporting by Shashwat Awasthi; Editing by Shounak Dasgupta and Kenneth Maxwell)

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