Iron ore price hits five-week low as traders fret about Chinese demand
Iron ore has slumped 29% this year, hurt by the prolonged slowdown of China’s economy.
Fortescue Metals Group (ASX:FMG) has sold off a power station in the Pilbara in an effort by the iron producer to further reduce costs.
ABC news reports that the iron ore miner sold the power station at the Solomon iron ore mine in Western Australia’s Pilbara for USD$300 million to Canadian power company TransAlta.
The news arrives a day after Fortescue announced it was slashing operating costs by AUD$300 million and putting USD$1.6 billion of capital investments on hold.
The pure iron ore player has been hit especially hard by the precipitous decline in iron ore spot prices over the past year, with chairman Andrew Forrest compelled to up his stake in Fortescue last week to boost confidence in the company as well as ailing share prices.
Fortescue will continue to purchase 100% of the station’s power output for the current life of the Solomon mine from its new operator under the terms of the sale agreement.
The sale remains subject to approval by Australia’s Foreign Investment Review Board and other authorities, yet Fortescue is optimistic that the deal will reach completion by the end of September.
