Fortescue shares take off again on reports of asset sales to China

Fortescue chairman Andrew Forrest. Mark Nolan/Getty Images

Andrew Forrest’s Fortescue Metals today moved to answer increasing reports that the iron ore miner is in talks to sell a stake in its assets to Chinese companies.

Two state-owned entities — China’s Hebei Iron & Steel Group and Tewoo Group — are said to be in separate talks.

Any deal would unlock substantial capital — up to $2 billion, according to a report in The Australian — to improve the pure play iron ore miner’s balance sheet.

In a statement to the market today, Fortescue says it is open to commercial talks with a range of groups on a regular basis at the “mining asset level”.

The Australian Financial Review says there is a sizeable gap between Fortescue’s price expectations and what the Chinese companies say they will pay.

“Fortescue’s position is unchanged, there is no agreement of such nature with any party at this time,” the company said in a statement to the market.

“Fortescue is aware of its continuous disclosure obligations to the ASX and the ongoing commitment to update the market, if and when, there are matters to disclose.”

The miner, which has been cutting costs and increasing production in response to the fall in iron ore prices, looked at selling part of its infrastructure assets in 2013.

In April, the company successfully raised $US2.3 billion to pay down debt, effectively giving it at least another three years breathing space during a period of market volatility.

A short time ago, Fortescue shares were up more than 8% to $1.995.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.