500% Profit Surge – How Fortress Minerals Is Defying Global Steel Headwinds In Q3 FY2026

The global steel industry is currently navigating a period of significant contraction. Between January and November 2025, global crude steel production fell by 2.0% year-on-year, led by a 4.0% decline in China—the world’s primary industrial engine. Despite these macro-level headwinds and a weakening “IODEX CFR North China of Platts Daily Iron Ore Assessments” price index, Fortress Minerals Limited has reported a stark divergence from the prevailing market trend.

While regional peers grapple with softening margins and production cuts, Fortress Minerals delivered a triple-digit surge in net profit during the third quarter of its 2026 financial year (3Q FY2026). For investors, the central curiosity is how a mid-tier iron ore player can generate exponential bottom-line growth while the realized value of its primary commodity is actually decreasing. The answer lies in an aggressive “scale effect” and a strategic diversification into the critical minerals required for the global energy transition.

The 503.3% Profit Explosion

The headline figure for 3Q FY2026 is a 503.3% surge in profit after income tax. For the three months ended November 30, 2025, the Group’s net profit jumped to US4.5 million, up from US0.7 million in the prior year period. This resulted in a significant boost to shareholder value, with Earnings Per Share (EPS) rising from 0.13 to 0.85 US cents.

The most impressive aspect of this growth is its resilience against pricing pressure. During the quarter, Fortress’s average realized selling price actually fell by 1.9%, dropping from US93.88/DMT to US92.09/DMT (Dry Metric Tonnes). This suggests the profit surge was not a lucky byproduct of market pricing, but a result of internal operational discipline.

According to the Group’s mission statement:

“Our team drives the business towards our vision of excelling in mineral exploration through strategic insights and alliances, addressing regional client demands, and maintaining ethical excellence.”

Beyond operational gains, a senior analyst must also note a US$0.4 million increase in unrealized gains on foreign exchange—driven by the strengthening Ringgit (RM) against the US Dollar—which provided a non-operational tailwind to the final results.

The Counter-Intuitive Cost Win: Efficiency Through Scale

Fortress’s performance reveals a classic textbook example of economies of scale: as volume rises, unit costs plummet. While total revenue grew 41.4% to US$18.4 million, the cost of sales only rose by 9.7%. This efficiency was unlocked by a massive 45.2% increase in the volume of Wet Metric Tonnes (WMT) sold.

By spreading fixed mining costs over a significantly larger production base, the Group reduced its average unit cost of sales by 24.4%. However, scaling is not without its overheads; selling and distribution expenses rose by 89.0% (to US$2.3 million) as royalty payments and logistics costs naturally increased alongside sales volumes.

3Q FY2025 vs. 3Q FY2026 Comparison

Metric	3Q FY2025	3Q FY2026	Change (%)
Volume Sold (WMT)	152,799	221,815	+45.2%
Average Realised Selling Price (US$/DMT)	93.88	92.09	-1.9%
Average Unit Cost of Sales (US$/WMT)	37.58	28.41	-24.4%
Gross Profit Margin (%)	55.8%	65.7%	+9.9 pts

Beyond Iron Ore: The Strategic Pivot to Critical Minerals

Fortress is systematically evolving into a diversified commodities player. Following its 2024 mandate to expand into “strategic and critical minerals,” the Group has executed several high-conviction moves:

• Regional Equity Stakes: In August 2025, the Group acquired a 49% equity interest in Sebanjar Bina Sdn. Bhd. (SBSB) for US$0.3 million.
• Strategic Optionality: Fortress holds an equity position in Australian-listed Norwest Minerals Ltd (NML). This investment includes “free options” (derivative financial instruments), providing the Group with a low-cost entry into broader commodity price appreciation.
• Multi-Mineral Production: The CASB mine is being re-engineered to produce copper and pyrrhotite concentrates alongside its traditional iron ore output, aligning the Group with global sustainability and electrification trends.

Building for the Future: Infrastructure as a Catalyst

The Group is aggressively leveraging its balance sheet to fund the next phase of growth. As of November 30, 2025, capital commitments for plant and equipment stood at US10.5 million, a massive leap from the US0.16 million committed the previous year. To fund this expansion, the Group successfully drew down US$4.2 million in trade financing during the period.

These funds are earmarked for transformative infrastructure:

1. CASB Pilot Plant: A dedicated facility currently under construction for the trial production of copper and pyrrhotite.
2. Integrated Processing Facility: A major complex slated for completion in FY2027 designed to service new offtake agreements (including two recently signed in August 2025) and enhance overall operational efficiency.
3. Bukit Besi Upgrades: Completion of a new crushing plant to optimize production flow for future regional demands.

Conclusion: A Resilient Path Forward

While the property sector crisis in China remains a drag on global sentiment, Fortress is strategically positioned to capture growth in “Ex-China” markets. The World Steel Association forecasts that steel demand in developing economies will rise by 3.4% in 2025 and 4.7% in 2026, with India and ASEAN serving as the primary engines of growth.

Within Malaysia, a supportive macroeconomic environment and steady domestic demand provide a stable floor for the Group’s regional operations. By lowering its cost base to US$28.41/WMT and expanding its mineral portfolio, Fortress has built a significant buffer against the volatility of the iron ore cycle.

As we look toward 2026, a fundamental question faces commodity investors: Is the “efficiency” of a low-cost scale producer or the “diversification” into critical energy minerals the more essential trait for long-term survival? For Fortress Minerals, the strategy appears to be an uncompromising pursuit of both.

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