Fortescue Metals Group Ltd., the iron ore producer that raised $4.5 billion in new loans three months ago, will resume work on its Kings deposit next month after commodity prices rose and it sold assets.
The resumption will increase production capacity by 40 million metric tons a year once the mine starts in December 2013, taking total capacity to 155 million tons a year, said the Perth-based company today in a statement.
Australia’s third-largest iron ore producer put Kings on hold in September after iron ore prices fell to a near three-year low of $86.70 a ton as slowing growth in China, the biggest consumer, curbed demand. Since then, iron ore has rebounded and the company has sold assets and started talks to sell a stake in its rail and port operations, with Macquarie Group Ltd. saying this week Fortescue will account for about 50 percent of the growth in global iron ore supply next year.
“The recent improvement in iron ore prices and market outlook, along with a number of measures undertaken by Fortescue, including the sale of non-core assets, a reduction in operating costs and the restructuring of existing bank facilities, underpinned the decision to complete Kings in the new year,” Chief Executive Officer Neville Power said in the statement.
Fortescue gained 4.1 percent to A$4.53 at the close of trading in Sydney, the most in two weeks. The stock, with nine buy, seven hold and four sell recommendations, has risen 6.1 percent this year. Iron ore last traded at $135.40 a ton on Dec. 24.