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Fortescue misses funding deadline

Wednesday, September 30th, 2009

Fortescue Metals has missed the deadline for securing US$6 billion in Chinese funding.

The funding was a condition of the deal struck in August, in which Fortescue agreed to sell all its second-half iron ore production to Baosteel and the China Iron & Steel Association (CISA) at a 35% discount to last year’s prices, as long as it could raise the US$6 billion to fund its expansion plans.

Fortescue said in its announcement today that negotiations would continue, but industry analysts are concerned the chances of the deal collapsing increase the longer the discussions drag out.

Fortescue Metals Group
ASX Code: FMG
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For more details on this news story:

The Australian: “Fortescue fails to meet China funding deadline”

Tags: Andrew Forrest, Baosteel, China Iron & Steel, CISA, FMG, Fortescue, Fortescue China, Iron Ore
Posted in ASX Company News | No Comments

Fortescue undercuts Rio and BHP in China

Tuesday, August 18th, 2009

Fortescue Metals Group has struck a $7.2 billion deal with the Chinese steel industry, offering to supply discounted iron ore in exchange for cheap finance and a priority place in future price negotiations.

Under the arrangement, Fortescue will provide iron ore at a 3% discount to the May benchmark price enforced by Rio Tinto and BHP Billiton.

In return for the discount, Chinese banks will be providing Fortescue with US$5.5 – $6 billion in loans, which will be used to pay off debt and boost production at the company’s Pilbara mines, with the aim of strengthening Fortescue’s position as a major player in Australia’s iron ore export market.

Both Rio and BHP have indicated the undercutting is irrelevant to their own pricing plans, however the China Iron & Steel Association said it would be using the Fortescue price in future negotiations.