Fortescue says it can self-finance expansion

Australian iron ore miner Fortescue Metals Group can largely self-fund its ambitious expansion plans without the need for Chinese loans, the firm said Monday.

Fortescue Chief Executive Andrew Forrest made the comment at a media briefing against the background of delayed attempts to secure $6 billion in finance from Chinese investors because the terms offered weren't acceptable.

Australia's third largest iron ore producer, which sells exclusively to Chinese steel mills, reported a near-20 percent jump in ore shipped in the quarter and said it had enough internal cash flow to fund its expansion.

It is expecting funds to more than triple annual output to around 95 million tons from the current 38 million tons.

Forrest said it no longer needed the Chinese funds to meet its target, which would put it in the iron-ore big league behind Vale, Rio Tinto and BHP Billiton.

From the strength of our cash flows, we will be largely able to finance the step-up to 95 million tons which was the focus of the Chinese financing, he said.

Fortescue agreed in August to sell 20 million wet tons of iron ore at a 3 percent discount to Chinese steel mills, provided they arranged $5.5-6 billion in financing by September 30.

A China Iron and Steel Association (CISA) official said under anonymity late last month that CISA and Baosteel had never promised that Fortescue would obtain Chinese funding, but CISA and Baosteel would help the miner get it.

Reuters

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