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Fortescue Metals Group overtakes Woodside to become WA’s second biggest firm

Fortescue Metals Group has claimed the title of WA’s second biggest company from oil and gas producer Woodside Petroleum as the iron ore miner’s shares hit fresh 10-year highs yesterday.

The Andrew Forrest-controlled company was capitalised at $36.4 billion at yesterday’s closing price of $11.83, making it worth nearly $3 billion more than Woodside at $33.7 billion.

Wesfarmers is WA’s biggest listed company with a market capitalisation of $49.8 billion.

Fortescue shares have nearly tripled in value since the start of last year when they were trading at about $4.

The fortune of its founder and chairman, Mr Forrest is now close to $13 billion based on his 35.4 per cent shareholding in the company.

Fortescue has benefited from a buoyant iron ore price that continues to defy the expectations of analysts who had forecast it to fall significantly in the new year.

Investors are bullish on Fortescue because of its move into higher-grade products, continuing operational efficiencies, an improving debt profile and its increasing ability to pay solid, regular dividends.

China’s iron ore imports surged in December to the second-highest volume on record. Inbound shipments totalled 101.3 million tonnes last month, just shy of a record 102.8Mt in September 2017.

Research group Wood Mackenzie yesterday predicted an average price of $US80 a tonne during 2020, about $US15/t below the current price.

It attributed the lower price expectation to slower demand from China and a 30Mt recovery in seaborne supply as Brazilian iron ore giant Vale recovers from a deadly tailings dam disaster last year that disrupted supplies.

The other big iron ore miners are also continuing to benefit from persistently strong prices for the steel-making commodity yesterday, with BHP up 64¢ to $41.24 and Rio Tinto gaining 95¢ to $106.19.

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