cashed up twiggy...nearlogy for fms

Open Chinese chequebook....to mop up what is left in the Pilbara to make it BHP/RIO v FMG.

FMS will be in the sights IMO...as will anything on the rail line.

We'll see...

Matt Chambers | August 15, 2009

Article from: The Australian

ANDREW Forrest's Fortescue Metals Group is believed to be in advanced talks with major policy bank Export-Import Bank of China (Exim Bank) over a multi-billion-dollar deal to finance expansion of its Pilbara iron ore mines.

Financing is being discussed along with a potential price negotiation that would give Fortescue certainty to meet repayments.

Contrary to previous speculation, sovereign wealth fund China Investment Corp is not one of the parties involved in the deal and the issue of a convertible bond is not being discussed.

In line with Mr Forrest's stated reluctance to further dilute shares, financing is not expected to contain an equity component. Fortescue shares were placed in a trading halt on Thursday, pending the expected completion of a commercial negotiation to be announced on Monday.

It is believed talks to nut out the final details of the agreement are scheduled to extend over the weekend.

Since the beginning of the year, Fortescue has held talks with Exim and CIC, among others, to finance a jump in production from its current plan of 45million tonnes a year to 120m tonnes.

Last week, it downgraded its ambition to 95m tonnes a year.

Some analysts have speculated that China is keen to see Fortescue increase production to provide a sizeable Australian competitor to BHP Billiton and Rio Tinto's planned iron ore merger, which would create a giant with more than 300m tonnes a year combined annual production.

Before Rio rejected Chinese aluminium giant Chinalco's $US19.5billion rescue package in May, China Exim Bank had offered the mining giant an unlimited line of credit, potentially worth $20bn, at attractive rates.

Any price agreement would be new territory for Fortescue, which has previously said it was a price taker.

A fraught round of price talks this year has seen it extend longer than ever before, as China has refused to fall in line with a 33 per cent discount settled on iron ore fines by Japanese, Korean and Taiwanese steel makers.

That deal now looks increasingly attractive for steel makers as spot prices are rising back to the levels of 2009 contract prices.