Fortescue focus shifts from expansions to paying off debt
KALGOORLIE (miningweekly.com) – Australian iron-ore major Fortescue Metals would focus on reducing its debt after achieving its 155-million-tonne-a-year design capacity, MD Nev Power said on Tuesday.
Speaking at the second day of the Diggers & Dealers conference, in Kalgoorlie, Power noted that Fortescue’s current debt stood at around $7.2-billion, with the company targeting an additional $2-billion to $2.5-billion in repayments.
He told journalists on the sidelines of the conference that the company was committed to repaying the debt as early as possible, in an effort to get its gearing to below 40%.
“The speed at which we get there will be determined by free cash flow from operations, which, in turn, is determined by the iron-ore price and our cost structures. We are continuing to improve our costs, and that is adding to our free cash flow,” Power said.
He pointed out that while the company was eager to pay down its debt, Fortescue had flexibility in when these repayments had to be made.
“We have a lot of flexibility in our balance sheet, and we are under no time pressure whatsoever. So we can bring forward a lot of the repayments, and can start at any time.”
The company’s first A$1-billion debt repayment was only due in 2019.
During the three months to June, Fortescue shipped some 38.7-million tonnes of ore, reaching an annualised rate of 155-million tonnes. Some 124.2-million tonnes of iron-ore product were shipped during the financial year ended June, at an average realised price of $106/t to generate revenues of $11.4-billion.
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