PERTH (miningweekly.com) – Iron-ore major Fortescue Metals has downgraded its production target for 2013, and decreased its projected cash costs.

The miner on Thursday announced that production for the full year was likely to be between 80-million and 82-million tonnes, as opposed to the initially forecast 82-million to 84-million tonnes.

The ASX-listed Fortescue also pointed out that it was in a phase of “significant cost reduction” and continued to focus on operational efficiencies, which would see the producer move down the cost curve.

Cash costs for the June quarter were expected to be between $30/t and $40/t, which would contribute to the full-year cash cost being at the lower end of Fortescue’s guidance of between $45/t and $50/t.

For 2014, ore shipments were expected to be between 127-million and 133-million tonnes, as Fortescue continued with its 155-million-tonne expansion project, with costs for that year estimated at between $38/t and $40/t.

MD Nev Power noted that capital expenditure for 2014 would reach some $1.9-billion, which was significantly down on the $6.3-billion spent over 2013 on the 155-million tonne-a-year expansion.

“Fortescue will enter the first half of 2014 poised to complete the fastest major expansion in the iron-ore industry. We will triple our production capacity to 155-million tonnes a year and consolidate our position as one of the world’s most important iron-ore producers critical in the Asian supply chain,” Power said.

He added that the miner’s low-cost Solomon operation and increasing operational efficiencies across the Chichester operations would move Fortescue further towards the bottom quartile of the global cost curve.

“As we complete our expansion programme, our focus will turn to ensuring our significant free cash flow generation is put towards degearing our balance sheet and rewarding shareholders with a move over time to a dividend payout ratio policy,” Power added.

The company’s estimated net debt position at the end of June was expected to be around $10-billion, taking into consideration cash on hand and excluding lease liabilities.

Meanwhile, Power on Thursday noted that the process for selling an interest in its Pilbara port and rail infrastructure was “substantially advanced”, with the company expected to announce a transaction by the September quarter.

Power noted that Fortescue was under no pressure to conclude a sale of an interest in the port and rail assets, adding that on the basis of significant shareholder value being released by degearing of the company’s balance sheet, a sale would only occur for fair market value, and on the basis that the current efficiency in infrastructure and mining operations was not impacted.

“We are very pleased with the progress to date, having short-listed potential investors and advanced to the next phase of the commercial process,” said Power.

“With our strengthening balance sheet, growing cash at bank and permanent restructure of operating costs, we will only execute a deal that delivers obvious value for our shareholders,” he added.