FORTESCUE METALS Group, Australia’s third biggest iron ore producer, cut its full-year spending forecast by 26 per cent to $4.6 billion, joining rivals in delaying expansions as commodity prices decline.
The development of its Kings deposit and completion of the fourth berth at its Herb Elliott Port will be deferred until prices rebound, the company said yesterday.
The shares declined in Sydney to the lowest in almost three years after the company reduced its annual production forecast by as much as 5 per cent to between 82 million and 84 million metric tons.
BHP Billiton, the world’s biggest miner, last month delayed about $68 billion of projects, including an iron-ore port expansion, amid sluggish global growth.
Fortescue may need to raise as much as $2.3 billion in extra debt if prices stay at current levels, according to JPMorgan Chase.
Iron ore prices fell to a three-year low of $88.70 last week.
Chinese steelmakers are struggling to remain profitable after they ramped up capacity, only for sluggish demand to send steel prices tumbling. – (Bloomberg)
