Fortescue shortfalls cause dip

Fortescue shares dropped 15% at one stage last week – falling to as low as $2.32 – as the company continued to wage battles over cancelled shipping contracts and amid Australian Securities and Investments Commission scrutiny.
The group has revealed its production costs have increased and that it will not make up lost production before the end of June. Fortescue netted $644m from its shares to Chinese steelmaker Hunan Valin Iron & Steel.
Results released last week showed Fortescue shipped 6.2m tonnes in the third quarter of 2008/09, on par with the December quarter.
A series of drawn out legal cases are expected to stem from last year’s decision to cancel shipping contracts following a substantial fall in chartering rates which left Fortescue paying to ship iron ore at rates agreed when the market was at its peak.