Fortescue delays $3.8 bn infrastructure sale in Australia's iron ore belt
Fortescue Metals Group (ASX: FMG), the world’s fourth-largest iron-ore producer, said Thursday it needs more time to sell a stake in its rail and port assets located in Australia's iron ore belt, a transaction estimated to bring up to $3.8 billion to the company’s coffers.
In a statement to the market, the company said while it would miss the June 30 deadline to conclude the sale, it expected to announce a deal, if one is reached, in the September quarter.
The delay affects smaller iron ore miners who hope a deal would unlock access to key rail and export ports. Only two other miners, BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO), own rail lines in Western Australia's remote Pilbara region and both refuse to let other producers use them.
Fortescue, Australia's third-biggest iron ore producer, began looking for a buyer for part of its Pilbara Infrastructure unit late last year, hoping to further reduce costs in the wake of dramatic falls in iron ore prices.
The news came only a day after the Perth-based miner announced it was slashing operating costs by $275 million and putting $1.6 billion of capital investments on hold. At that time, Fortescue also renegotiated billions of dollars in debt after being forced into emergency talks with its lenders.
The company’s shares lost 6.55% today, closing at 3.14.
Image: Pilbara iron via Flickr