By Sneha Kumar and Melanie Burton
MELBOURNE, Feb 25 (Reuters) - Fortescue reported a 23% jump in first-half profit on Wednesday, helped by record iron ore shipments and higher prices for the commodity, allowing the Australian miner to pay a dividend that topped expectations.
Its shares jumped as much as 3.8%, outpacing gains in its rivals BHP and Rio Tinto.
The world's fourth-largest iron ore miner is focused on trimming costs so it can pay cash to shareholders from its lucrative iron ore division while
it faces a period of slower growth and high spending into the 2030s.
It is seeking to diversify into metals expected to be in high demand for technology and clean energy, after it shelved its global green hydrogen plans last year blaming high production costs and limited demand.
Its two main growth projects, iron ore in Gabon and copper in Peru, won't enter production until next decade.
When pressed on growth this decade, Head of Energy Agustin Pichot on an earnings call pointed to the company's push to diversify into critical minerals and copper.
Those moves include a Brazilian rare earths project and copper exploration in Australia, Canada and Kazakhstan where it is fast-tracking a drilling programme.
PHASED TALKS WITH CHINA
Fortescue reported an underlying net profit after tax attributable of $1.91 billion for the six months ended December 31, up from $1.55 billion a year earlier, but missing the Visible Alpha estimate of $1.98 billion.
It declared an interim dividend of 62 Australian cents per share, a payout of 65% of profits, up from 50 cents announced last year and ahead of analysts' forecasts around 60 cents.
The results came as the miner hit record iron ore shipments in the first-half, with a 3% drop in iron ore costs and a 6.6% rise in realised prices.
Jarden expected Fortescue shares to trade strongly as a leaner cost base boosts margins and free cash flow, topped by an interim dividend that outperformed forecasts.
Fortescue executives declined to comment on supply negotiations with China's state-backed iron ore buyer, referring to them only as "phased discussions that are ongoing."
China Minerals Resources Group (CMRG) has restricted shipments from bigger rival BHP amid annual contract negotiations as it seeks to get better terms for its mills.
"Our products are moving well. We expect that to continue," Metals and Operations Chief Executive Officer Dino Otranto said on a results call.
Fortescue is using AI to make shipment scheduling more efficient while it expects replacing diesel with renewable power to trim $2-$4 a ton from iron ore costs by 2030, Otranto said.
(Reporting by Melanie Burton in Melbourne and Sneha Kumar in Bengaluru; Editing by Shinjini Ganguli and Sonali Paul)
