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Australia's Fortescue considers diversifying into gold, copper, energy
September 27, 2017 / 4:47 AM / 3 months ago

Australia's Fortescue considers diversifying into gold, copper, energy

QINGDAO, China (Reuters) - Fortescue Metals Group, the world’s No.4 iron ore miner, is looking to diversify its business by investing in energy infrastructure and exploring for gold and base metals, the head of the Australian company told Reuters on Wednesday.

FILE PHOTO - The logo of Fortescue Metals Group adorns their headquarters in Perth, Australia, November 11, 2015. REUTERS/David Gray/File photo

Chief Executive Neville Power who is due to step down in February, said Fortescue was carrying out exploration work in Australia and South America focused on gold and metals such as copper, as well as on lithium.

“(Those commodities) can provide strategic options for us for diversification and growth from a very low-cost base”, Power said in an interview on the sidelines of an industry conference in China.

“So we don’t have to go and make acquisitions, but rather we’re using our exploration skills to develop that growth option.”

Fortescue was also looking at energy infrastructure projects which could enhance its business in Australia’s Pilbara iron ore region, he added.

Fortescue announced Power’s departure on Sept. 15, taking the market by surprise and causing shares to slide. Power, who became CEO in 2011, led expansion that took the miner’s iron ore production to 170 million tonnes last year from 55 million tonnes when he started.

The search is still underway for his replacement, Power said. Fortescue’s chief operating officer, Greg Lilleyman, who joined in January from mining rival Rio Tinto, is widely viewed as a likely successor.

“I‘m looking forward to having a break and then I’ll think about what I want to do next,” Power, who flies planes for a hobby, said on his plans after he steps down.

WINTER CUTS

Power said Fortescue still expects to sell its entire iron ore output of 170 million tonnes to China this year, despite Beijing’s plans to cut steel output during winter in some key producing areas.

He said demand for raw material iron ore in steelmaking areas such as Tangshan and other parts of top-producing province Hebei, as well as in Tianjin, may drop. But appetite in parts of China not covered by the winter cuts could help cushion any impact.

“It will impact for sure, but again it’s a seasonal impact and I don’t think it’s dramatic. What will happen more likely is steel mills outside of (those areas) will be cranking their production up,” said Power.

The current iron ore price-range of between $60 and $65 a tonne is where the raw material should be, Power said, noting that there were unlikely to be any significant increases in global supply.

“The fundamental supply-demand balance hasn’t changed. There’s no new big iron ore projects coming in.”

He said although top iron ore miner Vale’s S11D expansion project was gradually ramping up in Brazil, it would likely be offset by the closure of older Vale mines.

Iron ore has fallen by nearly a third from this year’s peak to trade at $64.95 a tonne on Tuesday.

Reporting by Manolo Serapio Jr.; Editing by Joseph Radford

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