Australian iron ore giant Fortescue Metals Group (FMG) may revise its plans to sell off a minority stake in its Pilbara Infrastructure assets, experts have speculated.
FMG has reported delays in the process due to a strong level of interest, but its improved financial position may mean it has less motivation to complete a sale to finance its 12 billion U.S. dollar debt -- with the first repayments not due until November 2015.
The company reported Thursday that the sale process, which began in December 2012, was now "substantially advanced," and any transaction would be likely announced in the September 2013 quarter.
The stake is thought to be worth roughly 3 billion U.S. dollars. FMG says a shortlist of potential investors have now advanced to the next phase of talks.
However, the miner claims to be under no pressure to undertake a transaction. An FMG spokesperson told Xinhua last week the company was in a "strong financial position".
CEO Nev Power said in a statement Thursday: "We continue to see strong demand for our products. China's economic growth and long term demand for iron ore is unchanged.
"Fortescue will enter the first of half of FY2014 poised to complete the fastest major expansion in the iron ore industry. We will triple our production capacity to 155 mtpa (million tonnes per annum), and consolidate our position as one of the world's most important iron ore producers critical in the Asian supply chain."
Power added that a Pilbara Infrastructure sale would only occur for fair market value, and on the basis that it would not obstruct the efficiency of current mining operations.
"We will only execute a deal that delivers obvious value for our shareholders," Power said.
Given the company's reports of an improved financial stance, JPMorgan analyst Lyndon Fagan told the Australian Financial Review on Friday he thought the deal would only likely go ahead if "quite favorable".
FMG has already offloaded its Solomon Power Station in Western Australia to TransAlta Corp for 310 million AU dollars (285 million U.S. dollars) and a 25 percent interest in the Nullagine Joint Venture, giving it some room to move.
But unseasonal wet weather in recent weeks forced the miner to reduce its expected exports for 80-82 million wet metric tonnes, down from 82-84 million tonnes.
Despite the reduction, FMG estimates that its debt position on June 30, 2013 will stand at about 10 billion U.S. dollars. Repaying it, said Power, will become a focus after expansion targets are met at the end of this year.
Parties reported to be interested in a Pilbara Infrastructure stake include Canadian fund manager Brookfield Infrastructure Partners -- already a player in Western Australian rail, and Hong Kong-based Cheung Kong Infrastructure.
