FMG in no rush to sell assets, turns down two potential deals
Fortescue Metals Group isn’t waiving the white flag just quite yet. The Australian mining firm and iron ore connoisseur said it was in no hurry to sell off part of its iron ore mining operations in Australia, choosing instead to wait for a recovery in the market.
“We are in very strong shape and therefore we can be patient,” said Chief Executive Nev Power in an interview. “That might mean we need to wait until potential investors think the iron-ore price is about to go up again, and then they will be more motivated.”
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Power said the company has been approached by two parties interested in buying a stake in its operations, but no advanced negotiations are under way.
“We are not under any time pressure on that, though ... and I think we would be more inclined to sell in an environment with a better iron-ore price,” said Power. “We don’t need to have a fire sale.”
Prices for iron ore have dropped 60 percent since last year, falling to its lowest price ever at $44.10 per ton in July.To make matters worse, Goldman Sachs forecasts a further 30 percent decline in iron ore prices over the next 18 months.
Fortescue still has more than $7.2 billion in debt, which includes subtracting cash on its balance sheet at the end of June. “The reality is we can repay our debt from cash flow, and we will do that whatever the iron ore price is,” said Power.
If FMG were to contemplate a deal, it would only be interested in taking on an investor to help accelerate its debt repayments.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.