This pushed earnings up 2 per cent and allowed the Anglo-Australian miner to promise a US$2.5 billion dividend payout for shareholders.
Announcing its fourth quarter fiscal results, Fortescue projected that iron ore shipments to China would rise 6 per cent to 178 million tonnes for the full financial year ended in June, exceeding its target of 177 million tonnes. Full-year results will be announced in a few weeks.
The miner said exports were buoyed by strong Chinese steel production of 499 million tonnes in the first six months of the year, 1.4 per cent higher than the same period last year.
Rio Tinto chief executive Jean-Sebastien Jacques said China had effectively absorbed the additional iron ore diverted from weaker steel markets in Europe and Asia.
"The main market for our high-quality iron ore is China, which compared to the broader global economy has recovered exceedingly well," Jacques said while announcing company results on Wednesday.
"China's steel production and demand for iron ore in 2019 was strong and this has continued despite disruptions in the first quarter.
"In 2020, [China's] crude steel production has again exceeded the 1 billion tonne annualised run rate and June production was a new all-time high record."
Steel markets in Europe, the United States, Japan, South Korea and Taiwan were still weak, Rio Tinto said.
BHP also said last week it had met production targets for iron ore, thanks to China's economic recovery.
"In China, blast furnace utilisation rates have increased from around 80 per cent earlier in February 2020 to above 90 per cent in June 2020," BHP said in its financial year review.
"We continue to believe that if China can avoid a second wave of Covid-19, steel and pig iron production can both rise in the 2020 calendar year versus the prior year."
Rio Tinto said Australia's contract-based iron ore shipments were strong, despite impacts from the coronavirus outbreak, allowing it to outperform other major miners such as Vale in Brazil, which has suffered from production restrictions and delays.
But Vale, which has recently suffered setbacks including the Brumadinho dam collapse at its Corrego do Feijao mine, also saw profit recover in the second quarter thanks to higher iron ore prices. It said on Wednesday it would pay dividends that have been suspended since the dam accident last January.
The continued demand for iron ore in China means Rio Tinto is committed to developing new iron ore projects at Simandou blocks 3 and 4 in Guinea, along with Chinese partner Chinalco Mining and the country's government.
The diversified miner said it had drawn up plans to commission China-based design institutes to update and re-engineer the infrastructure of the project, which was approved in 2010.
"The Chinese are pretty active and they want to see a pathway to develop the two blocks," Jacques said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
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