FMG seeking $5 billion to expand Pilbara mines
July 21, 2008
July 21st (ABC News) – A mining analyst says Fortescue Metals Group (FMG) should be able to obtain finance for its expansion plans despite the downturn in the markets.
FMG is planning to triple the size of its Pilbara mining operations.
Alex Passmore from Patersons Securities says that could cost it up to $5 billion, but FMG’s strong cash flows, now that exports of iron ore to China are underway, put the company in a good position.
“With the liquidity of the project significantly increased following this milestone, and strong cash flows given the high iron ore prices, and relatively low cash costs that Fortescue show, the financing is certainly achievable,” he said.
“The project can certainly support large scale expansions from here.
“The resource base and the reserve base can support expansions, potentially up to 200 million tonnes, but financing and the final tonnage number is yet to be decided by the board of FMG.”
The head of FMG, Andrew Forrest, is also confident about obtaining the funding.
Mr Forrest says there are a number of options available.
“Even with the credit markets having sunk the way they have, there’s an enormous amount of liquidity in the system but it’s chasing very few, very good projects,” he said.
“Now, Fortescue is one of those very few, very good projects.”