Australia's Fortescue Metals sells power station for $300 mln

MELBOURNE, Sept 5 Tue Sep 4, 2012 7:08pm EDT

MELBOURNE, Sept 5 (Reuters) - Fortescue Metals Group has agreed to sell a power station for $300 million, it said on Wednesday, a day after it put the brakes on tripling its iron ore capacity and slashed jobs to shore up its debt-ladened balance sheet.

Australia's no.3 iron ore miner said TransAlta Corp, Canada's largest publicly traded power generator, would buy the 125 megawatt dual-fuel power station and sell all of the power to Fortescue over the life of its Solomon mine.

Fortescue announced on Tuesday it was slashing $1.6 billion in capital spending this year, delaying construction on 40 million tonnes a year of iron ore capacity, and cutting more than 1,000 jobs to help save $300 million.

A sharper and longer than expected plunge in iron ore prices forced the company to take the steps as it is saddled with $11.3 billion in long term debt, with gearing of 62 percent, more than double the gearing of bigger rivals BHP Billiton and Rio Tinto .

The power station sale is expected to close by the end of September.

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