Fortescue Metals Group isn’t waiving the white flag just quite yet. The Australian mining firm and iron ore connoisseur said it was in no hurry to sell off part of its iron ore mining operations in Australia, choosing instead to wait for a recovery in the market.
“We are in very strong shape and therefore we can be patient,” said Chief Executive Nev Power in an interview. “That might mean we need to wait until potential investors think the iron-ore price is about to go up again, and then they will be more motivated.”
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Power said the company has been approached by two parties interested in buying a stake in its operations, but no advanced negotiations are under way.
“We are not under any time pressure on that, though ... and I think we would be more inclined to sell in an environment with a better iron-ore price,” said Power. “We don’t need to have a fire sale.”
Prices for iron ore have dropped 60 percent since last year, falling to its lowest price ever at $44.10 per ton in July.To make matters worse, Goldman Sachs forecasts a further 30 percent decline in iron ore prices over the next 18 months.
Fortescue still has more than $7.2 billion in debt, which includes subtracting cash on its balance sheet at the end of June. “The reality is we can repay our debt from cash flow, and we will do that whatever the iron ore price is,” said Power.
If FMG were to contemplate a deal, it would only be interested in taking on an investor to help accelerate its debt repayments.