A spark of interest in shares on Fortescue Metals Group (FMG) after Bloomberg reported that Chinese companies were interested in buying a share of the troubled iron ore miners WA assets.
The Bloomberg story saw the shares jump more than 10%, but the retreated after Fortescue issued a denial.
Fortescue shares still closed yesterday up 6.2% at $1.885.
In its story Bloomberg that Fortescue had been approached by Hebei Iron & Steel Group and Tewoo Group about purchasing a stake in FMG’s iron ore infrastructure assets located in the Pilbara.
The talks with Hebei and Tewoo, which is also known as Tianjin Material & Equipment Group Corporation, are reportedly at an early stage, according to Bloomberg.
FMG 1Y – Is China coming for Fortescue’s assets?
Fortescue said told the ASX in a statement:
"As previously reported, whilst there is no imperative, Fortescue is open to commercial discussions with a range of groups on a regular basis at the mining asset level. There is no agreement of such nature with any party at this time.”
Fortescue is due to release its full year financial results on August 24.
It’s not the first time this sort of story has emerged around Fortescue. It was a suggestion from the company back in the big iron ore sell down in the closing months of 2012.
Fortescue was under enormous pressure because of high costs, high spending and rising debt (it was well into its construction phase).
It cut costs, refinanced debt and floated the idea of a a partial asset sale (by selling shareholdings) to raise more cash.
But a recovery in the iron ore price for much of the next year saw that plan abandoned as Fortescue boosted cash reserves and repaid debt more quickly than planned.
The idea returned briefly earlier this year when Fortescue’s financial position was again pressured by falling iron ore prices.
