Fortescue's stalled projects may be sold

Fortescue Metals Group Ltd says it may sell projects put on hold due to the Resources Super Profits Tax (RSPT) to foreign firms and already has two expressions of interest.

Chief executive Andrew Forrest has also accused the pro-RSPT camp of waging "class war".

He has again called on the prime minister to abandon the proposed tax, which the billionaire dubbed "an attack on Australian competitiveness".

Fortescue shares closed 19 cents, or 4.68 per cent, lower at $3.87 on Wednesday - wiping more than $560 million from the miner's market value.

Australia's third largest iron ore miner on Wednesday put more than $17 billion worth of expansion projects on hold - its $US9 billion ($A10.5 billion) Solomon Hub and $US6 billion ($A7.02 billion) Western Hub in Western Australia's Pilbara region.

The company said debt financing these projects had become difficult with the looming threat of the federal government's "poorly designed" RSPT.

"I am a very experienced project financier and I cannot see a way ... that we can maintain our equity, our Australian equity, in these projects and still develop them under this highly theoretical new tax," Mr Forrest told a teleconference.

However, Fortescue will proceed with the $US4.5 billion ($A5.26 billion) expansion of its Chichester Hub, which will lift output from its first two mines, Cloudbreak and Christmas Creek, from 55 million tonnes per annum (Mtpa) to 95Mtpa.

This could go ahead as it would be financed from internal cashflows over the next two years, prior to the proposed implementation of the new tax.

"I do regret to say that any projects we can't get going before the tax cuts in will not continue," Mr Forrest said.

"Those that cannot be developed in time are now facing very uncertain futures.

"It is true that we could sell these projects.

"They could still be developed. They could be developed by other countries. They could be developed by those who don't have their current revenue stream impacted in the quite horrific way that is being proposed by this new tax."

Mr Forrest said he wasn't bluffing about selling the stalled projects to interests abroad if the RSPT goes ahead.

"I'm very serious," he said.

"We've had two approaches and the approaches have been quite blunt: `Andrew, you can no longer finance these projects. We can help you out. We can allow you to pull a rabbit out of the hat. You can sell it to us'.

"I am not about to say that Australian assets should go offshore just because a tax which will hurt every single working Australian got proposed.

"(But) if the tax goes through, then we have to return those phone calls.

"Holding a big project is a very expensive exercise and a company like Fortescue, big that it is, couldn't afford to keep a project like Solomon on hold for long."

Mr Forrest said talks were needed with the federal government on "how we can keep our assets being developed, how we can keep our assets being Australian".

But the federal government had repeatedly said that 40 per cent RSPT rate was not negotiable, so "what else is there to negotiate?", Mr Forrest asked.

"I've tried to get hold of people who I do admire in parliament ... and they're not returning calls.

"I've told him (Kevin Rudd) it has already damaged Australia: `You never took advice from theoreticians before, don't start now. You don't need to create new diversions to get elected. Take this off the table'."

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

• Bookmark this page
• Share this article
  •  
  • facebook
  • slashdot
  • digg
  • Reddit
  • stumbleupon
  • linkedin
  • twitter
• Got more on this story? Email CIO
• Follow CIO on twitter

• Share
  Share this article

  •  google+
  • facebookfacebook
  • slashdotslashdot
  • diggdigg
  • RedditReddit
  • stumbleuponstumbleupon
  • linkedinlinkedin
  • twittertwitter
• print
• email
• Bookmark