Fortescue Cuts Spending Forecast by Half on Global Iron Ore GlutJames Paton
Fortescue Metals Group Ltd. slashed its full-year spending plans by half, joining its larger rivals in making cuts after a plunge in iron ore prices.
The world’s fourth-biggest iron ore exporter plans to spend $650 million in the year through June 2015, compared with its previous budget of $1.3 billion, the Perth-based company said today in a statement. Fortescue’s outlook for shipments for the year is unchanged at 155 million to 160 million metric tons.
“In the current environment it is prudent to defer investing additional capital that increases supply,” Chief Executive Officer Nev Power said in the statement.
Fortescue joins miners including Rio Tinto Group and BHP Billiton Ltd. in cutting spending amid tumbling commodity prices. Iron ore prices this week fell below $70 for the first time in five years as increasing production from the world’s largest miners deepens a global glut.
Rio, the second-biggest miner, deferred plans to approve a new $1 billion Australian iron ore mine and lowered its 2014 expenditure estimate. BHP, the biggest miner, earlier this week announced capital outlays will drop to $13 billion in fiscal 2016, down more than 40 percent from 2012.