Fortescue Metals Group Ltd., Australia’s third-largest iron ore supplier, said it’s got an extra $1.5 billion available for further debt repayment as cost cutting has boosted cashflow.
The amount is in addition to the $384 million of on-market debt repurchases the Perth-based producer made in the September quarter, Chief Executive Officer Nev Power said Tuesday in an e-mailed statement. Fortescue, which had net debt of $6.6 billion at the end of September, flagged this month that it will seek to continue to cut its liabilities even as it upholds dividend payments.
Good for it, it will need to. The Dalian iron ore forward curve is now pricing $41 by May. That will give FMG a margin of $2-3 per tonne. Then Vale launches 90 million tonnes of S11d a few months later even as China keeps building less and less and Roy Hill, Sino, Anglo and India keep pumping more.
At some point the market will move from concerns about FMG financial sustainability to concerns about FMG operational viability.
