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Fortescue Metals Group is poised to sell off part of its most valuable asset, as the company continues efforts to lower debt and free up enough cash to restart the expansion projects that were halted in September.
The iron ore exporter announced this morning that it had received strong interest from investors keen to buy a minority stake in Fortescue's railway and ports, which are held by Fortescue as a separate subsidiary.
No price indication was given, but analysts have valued the infrastructure assets at $US6 billion.
Export infrastructure is crucial to companies seeking to build iron ore companies in the Pilbara, and the recent downturn in iron ore has left numerous junior players holding stranded iron ore assets hundreds of kilometres from the coast.
Fortescue said the process was being conducted with a "small group of selected investors" but declined to say who they were.
Speculation has long raged that Gina Rinehart's Roy Hill iron ore project would have a better chance of becoming a reality if it did a transport deal with an existing railway owner like Fortescue, however Ms Rinehart's camp has, to date, resisted and preferred to build its own railway and port infrastructure.
Fortescue is the only iron ore miner in the Pilbara to sell third party access to its railway, after dealing junior exporter BC Iron onto its railway in 2009.
Third party access is a cause celebre for Fortescue, which fought for years to gain access to the railways of BHP and Rio Tinto before simply building its own.
But Fortescue chief executive Nev Power warned this morning that rail access would not be given away cheaply, declaring that any sale from the current talks would be at "full" market rates and would only be approved if it did not affect the efficiency of Fortescue's own mining operations.
Fortescue is expected to announce the restart of its Kings iron ore project - which was halted amid a debt crisis in September - as early as this week.
This article first appeared on www.brisbanetimes.com.au
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