<span class="" id="parent-fieldname-description"> On the back of strong end of year numbers, Fortescue Metals Group is showing a decreased interest in selling off a $3bn stake in its ports and rail business, The Pilbara Infrastructure. </span> <p>FMG reported a 12% rise in full year profit on August 22, a figure buoyed by a 41% rise in iron ore exports, which finished the year at 81 million tonnes.</p><p>The miner has also reported a significant reduction in costs, thanks to a new focus on efficiency.</p><p>It also plans to begin paying off its debts within the calendar year.</p><p>Shareholders each received a 10 cent-per-share, fully franked dividend as part of the strong result.</p><p>Following the end of financial year announcement, FMG’s chief executive, Nev Power, threw a wet blanket over speculation that the sale of a minority portion of FMG’s railway and port facilities in WA’s Pilbara was coming soon.</p><p>“We’ve had significant interest from global infrastructure investors and that has generated significant offers,” Power said.</p><p>“However to date they have not met our objectives for value and terms.</p><p>“The company had initially aimed to reach a deal that would allow it to retain a majority stake and keep control over the port and rail operations by the end of June. It extended that to September but there is now no deadline.</p><p>“It’s not shelved,” Power clarified. “We’re in discussions with parties right now. We don’t expect to see anything in the September quarter but we haven’t set a date on it.”</p><p>When FMG began to rearrange its finances to more easily allow part of its Pilbara infrastructure to be sold, many speculated that it was looking to earn cash to help repay its debts quickly, an effort likely driven by deteriorating resource prices and a tough international and local market.</p><p>An ongoing negotiation with another miner, Brockman Resources – which wants access to FMG’s prized rail assets – would also have been a driving factor for FMG to have at least part of their infrastructure taken off their hands.</p><p>But the strong financial result could push the decision makers at FMG in the other direction – further away from selling any stake in the company’s rail assets.</p><p>Another aspect which could firm up confidence for FMG is the new, US$1.15bn joint venture agreement it has just signed with Formosa Plastics Group, Taiwan’s largest private company.</p><p>Under the agreement, Formosa will acquire a 31% unincorporated interest in FMG’s Iron Bridge Joint Venture, for US$123m, and would fund the first US$527m on the project’s development. It will also prepay US$500m upfront to The Pilbara Infrastructure – the company through which FMG owns its Pilbara rail and port facilities – for access to these facilities.</p><p>FMG Iron Bridge is already 12%-owned by China’s Shanghai Baosteel Group, which means that after the Formosa deal, FMG will still own 57% of the joint venture.</p><p>FMG Iron Bridge owns the North Star and Glacier Valley iron ore deposits, which are about 100km from Port Hedland. The two deposits have a combined iron ore resource of 5.2 billion tonnes.</p><p>Formosa is investing in the construction of a 22mtpa steel mill in Vietnam, and is expected to use its new interest in the Iron Bridge joint venture as part of the supply of iron ore for that mill.</p>
