Fortescue Metals Group (FMG ▲ 1.79% 4.55) Ltd., Australia’s...

Fortescue Metals Group (FMG ▲ 1.79% 4.55) Ltd., Australia’s third-biggest iron ore producer, said paying its debt will take longer after the recent decline in prices. The steelmaking ingredient fell this month to its lowest since September 2012 on slowing demand in China, the largest consumer, and an expanding worldwide glut. Perth-based Fortescue had net debt of $7.7 billion as of March 31, according to a quarterly filing. “We have a priority before we do anything else to pay down debt,” Peter Meurs, Fortescue’s development director, said today in an interview in Perth. “Obviously we don’t generate as much money, so it will take longer.” Iron ore fell into a bear market in March, and Australia, the world’s largest exporter, this week cut its price estimates for this year and 2015. Fortescue, which has been seeking to speed debt repayment and has cut debt by $3.1 billion since November 2013, was committed to additional repayments of as much as $2.5 billion, the company said in a presentation last month. Iron ore with 62 percent content delivered to Tianjin port in China, a benchmark, rose 0.4 percent to $93.70 a dry ton yesterday, according to The Steel Index Ltd. Notes issued by Fortescue handed investors a 1.2 percent return this year, after offering 9.5 percent in 2013, according to a Bank of America Merrill Lynch index. The broader gauge of junk-rated miners has returned 3.1 percent. Strong Cash “Provided they remain reasonably strongly cash flow positive, the market won’t be too alarmed,” Michael Bush, the Melbourne-based head of credit research at National Australia Bank Ltd., said by phone. “It would’ve been unrealistic to have expected prices to have remained up at the $130 a ton level.” The price slide “doesn’t change our priority and we are profitable and successful now,” said Meurs. “You get these low iron ore prices but we will still pay down debt.” The yield premium over Treasuries on Fortescue’s $1.5 billion note due 2019, its largest outstanding bond, widened to 421 basis points as of 4 p.m. in Sydney from 351 at the end of 2013, according to BNP Paribas prices. To contact the reporters on this story: Rebecca Keenan in Perth at [email protected]; David Stringer in Melbourne at [email protected] To contact the editors responsible for this story: Jason Rogers at [email protected] Keith Gosman, Indranil Ghosh