Aussie miner Fortescue Metals (ASX:FMG) has opted to abandon plans to invest in an oil and gas explorer as spot prices for its mainstay commodity of iron ore continue to rise.
Sky News reports that on Tuesday Fortescue decided not to pick up a $4.2 million share placement in West Australia's Oil Basins, a mere two months following the announcement that the iron ore player would take an 18% stake in the oil and gas junior.
Despite the modest size of the investment the market had previously interpreted Fortescue's decision to invest in Oil Basins as a portent of broader efforts by the pure iron ore player to diversify its playbook.
Analysts point out that the recovery of iron ore prices on the back of resurgent Chinese demand have made Fortescue's diversification ploys redundant.
Fortescue and other iron ore miners received a battering in 2012 from precipitous declines in iron ore prices and ailing demand from key export market China.
Spot prices for iron ore roared back into rude health during the final quarter of 2012 as China's steel mills went back into action, and have since risen to above USD$150 per tonne.