WA, Fortescue seeks cash to expand

• Xiao Yu and Jesse Riseborough
• The Age, MEL, December 14, 2007
FORTESCUE Metals Group, which is aiming to become Australia's third biggest iron ore producer, is seeking at least $1 billion in loans from Chinese banks to fund expansion.
Chief executive Andrew Forrest held talks with bank executives in Beijing this week for low-interest loans to fund the expansion that will supply Chinese steel makers, according to two bankers involved in the talks. The bankers declined to be named because the talks are confidential.
Fortescue's government relations manager, Julian Tapp, confirmed that Forrest was discussing financing with Chinese banks.
Fortescue needs money to fulfil its plan to quadruple output at its existing $2.7 billion Pilbara project in by 2014. Contract iron ore prices have tripled in the past five years on increased demand from China and may rise by 50% next year, Macquarie Group said in October.
"We are looking to expand. We obviously need finance to expand and we are talking to the Chinese banks along with a load of other people," Mr Tapp said.
"This is absolutely at a preliminary stage and we haven't got to the stage of talking about how much at the moment."
Fortescue plans to obtain funds from China as early as January, said the bankers, who described the talks as preliminary.
The loans would be linked to its sales of iron ore to China, they said.
BHP Billiton's plans to buy Rio Tinto to create a company that controlled more than a third of the global iron ore market, is prompting China to seek to secure alternative supplies of raw materials.
A BHP takeover of Rio would concentrate supplies of copper, iron ore and coal and may weaken consumers' bargaining power. China, the largest buyer of metals and iron ore, is already hurting from a threefold gain in commodity prices since 2002.
Fortescue has already signed sales agreement with Chinese steel mills including Baosteel Group, China's biggest steel maker, Tangshan Iron & Steel and Hangzhou Iron & Steel Group.
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(27-Oct-2010, 12:58 PM)McKyle025 Wrote: There is really a need of a Big Loan if a company needs to expand especially if it is as big company as yours. There is a lot of Loan that a Company can apply to if it needs a huge amount of money to expand. But Before applying to a Loan the company must be sure that the bank is in good terms in offering a Loan as well as for the bank to be sure that the Company can pay the Loan.

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