Fortescue chief raises stake in company by AUD$39 million as iron ore prices plunge
The founder and chairman of Fortescue Metals Group (ASX:FMG) Andrew Forrest raised his stake in the company by AUD$39 million this week amidst declines in the prices of both Fortescue shares and iron ore.
According to Fairfax Press Forrest purchased five million shares on Monday for $20.1 million at an average price of $4.02.
Forrest subsequently purchased the same amount of shares for $18.5 million on Wednesday at $3.70 a share.
Observers believe that the head of the world's fourth largest iron ore producer has made the purchases to prop up ailing faith in the company following swift declines in ore prices as well as surging debt levels.
A key Chinese index of iron ore prices fell for the 11th consecutive day on Thursday to USD$88.70 per tonne, hitting its lowest level since October 2009 and reaching far below the USD$120 price floor outlined by mining executives a month ago.
China-related factors have dragged down iron ore prices of late amidst concerns of a slowdown in the ascendant superpower's economic growth as well as gross oversupply in its steel producing sector.
Fortescue, as a pure iron ore player, is highly vulnerable to untoward vicissitudes in ore prices, especially at present due to a reported $10 billion debt burden.
Fortescue shares were down 2.23% at around $3.51 in afternoon trading on Friday, and had slumped almost 12% over the past week.