Fortescue Metals Group's new chief executive has announced an ambitious target before he even begins his new role, saying the company plans to bring forward its iron ore production target of 155 million tonnes per annum by up to a year.
Fortescue Metals Group's new chief executive has announced an ambitious target before he even begins his new role, saying the company plans to bring forward its iron ore production target of 155 million tonnes per annum by up to a year.
Incoming Fortescue chief executive Nev Power told reporters today that long-lead items had been ordered, and that contracts and funding were in place to bring the expansion forward to June 2013.
The target of 155 million tonnes per annum was originally scheduled for June 2014.
"We have taken a very deliberate process of bringing projects on as fast as we possibly can, so we've rolled on from the momentum that was there ... using the same contractors, the same suppliers and in a lot of cases using the same in-house team," Mr Power said.
"It hasn't been a matter of demobilising and then re-mobilising but rather continuing that very strong momentum.
"It's basically the same scope; it's just been brought forward by accelerated deliveries."
Mr Power said the inherent strength of the iron ore market meant Fortescue had many options to consider to fund the expansion.
"We raised some bonds last year and that's added a lot of strength to the balance sheet and we opportunistically looked at raising more money this year when the commodity market went down in the U.S.," Mr Power said.
"We've got a number of different options to add to the funding and we'll be considering all of those options going forward, but considering the continued strength of the iron ore price, the internal cash flows are doing a lot of the heavy lifting for us."
Mr Power will take over from Andrew Forrest from 18 July, with Mr Forrest replacing Herb Elliott as company chairman.
Meanwhile, Mr Forrest deflected any suggestion that he had stepped aside as chief executive to lessen the impact of him potentially being removed from the company register after he was found in February to have breached the Corporations Act.
The Federal Court in February overturned a decision that cleared Mr Forrest and Fortescue of misleading investors in regards to agreements with Chinese companies in 2004 under an appeal by the Australian Securities and Investments Commission.
Mr Forrest said he, the Chinese companies and Fortescue had only ever announced what they believed to be true at the time; enforceable legal agreements.
"There has been no evidence ever produced that the Chinese or Fortescue believed anything but that," Mr Forrest said.
He said Fortescue had not taken any court orders into account when formulating its expansion plans.
"We are managing this company for what is, we do not consider that downside and we're marching straight on.
"We are just as concerned about Nev Power being hit by a bus as we are of Andrew Forrest being hit by ASIC."
