Australia's third largest iron ore producer hit hard

Billionaire AndrewForrest faces one of the toughest tests in the next 12 months, with his Australian iron ore producer Fortescue Metals Group the only Australian blue-chip resource index to give investors in 2017 Bring loss of stocks, and in the last year, the stock performed the best.

The reason is that Chinese steelmakers tend to use high-quality ores produced by their competitors, and competitors insist the transition will be permanent.

Forrest said last month that ElizabethGaines, who took over as chief financial officer of the company, will enter the company next February. The main issues facing Gaines and a number of new executives are as follows:

Industry restructuring

Chinese mills are using better quality raw materials to produce steel to meet national pollution control policies and increase output at record profit margins. This is a huge change, according to UBS Group, with some of the ore prices plummet and Fortescue hit a 31% discount on its low quality products in the last three months of the year.

Once thought that China's change will be short-term Fortescue last month said that the goal now is to increase the iron content of more than 60% of the product capacity. At present, the average iron ore produced by suppliers is 58%, while the industry benchmark is 62%.

Paul Hassey, an RBCC Capital Markets analyst with Melbourne-based RBCCapitalMarkets, said: "It's a recognition that the strategy they are pursuing so far may not be sustainable, and improving quality may mean higher mining costs and Fortescue may It takes two years to take advantage of the better grades of the new mine.

Outgoing CEO NevPower said in a statement, "Manufacturers' investment in processing and compounding is crucial to long-term sustainability and competitiveness as a raw material supplier and Fortescue will continue to refine its strategy, Maximize cash profit without being affected by market volatility. "