Troubled Australian iron ore miner Fortescue Metals yesterday said it had secured a US$4.5 billion loan to pay down debts that have seen it defer expansions and cut jobs as commodity prices slide.
Fortescue CEO Nev Power said the credit facility, underwritten by JPMorgan and Credit Suisse, had extended the mining company’s repayment deadline to November 2015 and boosted its liquidity to meet the challenging conditions.
“Fortescue took decisive action to secure a facility that underwrites our liquidity and maximises flexibility ... [removing] uncertainty around our financing arrangements,” Power said in a statement.
“Fortescue has moved quickly to ensure its capital structure can withstand prolonged market volatility,” he added.
Investors concerned about the firm’s ability to repay gross debt of about US$9 billion as iron ore prices plunge welcomed the news, with the miner’s share price surging 17.06 percent to close at A$3.50.
“Strong interest has been expressed to Fortescue by a range of parties interested in partnering ... in certain of its assets,” the mining firm founded by billionaire tycoon Andrew Forrest said.
“Fortescue is currently evaluating these approaches ... and will only be pursued if they clearly add shareholder value,” it said.
West Australian-based Fortescue deferred two planned expansions earlier this month and said it would cut jobs as it grapples with a commodities slowdown due to China’s cooling.
Mining giant Xstrata also announced that it would cut jobs this month in a bid to reduce costs and BHP Billiton shelved its massive Olympic Dam copper and uranium mine expansion.
Australia yesterday slashed its mining export earnings forecasts for the fiscal year to June 30 next year by 10 percent to A$189 billion (US$198 billion), down 2 percent from the last fiscal year.
It is the first time since the global financial crisis that mining-driven Australia’s projected resources exports earnings have fallen, with forecasts of a 27 percent slump in global iron ore prices and 28 percent for steelmaking coal.