By Rebecca Le May PERTH, Oct 20 AAP - Fortescue Metals Group...

By Rebecca Le May
PERTH, Oct 20 AAP - Fortescue Metals Group Ltd's technical woes
at its mines in Western Australia's Pilbara region appear to have
been ironed out.
Executive director Graeme Rowley emphasised Fortescue's rising
production rates, driven by processing improvements and
contributions from its second mine in the region, named Christmas
Creek, at a site tour for media on Monday.
The company's billionaire chief executive Andrew Forrest said he
accepted Fortescue had had its fair share of sceptics in recent
years but this sentiment was being dispelled as it incrementally
delivered better production.
CMC Markets analyst David Taylor said Fortescue had been
hampered by much-reported teething problems - high levels of
alumina and too much moisture in its ore - but there was still good
reason to believe in the company.
Fortescue says it has overcome the alumina problem with the
commissioning of a de-sand plant, while dry ore from Christmas
Creek had been blended with wet ore from the company's first mine,
named Cloudbreak, resulting in a product with strong sintering
qualities.
However, the de-sand plant had consumed a substantial amount of
human and financial resources that would otherwise have been
channelled towards ambitious expansion plans.
The aggressive growth targets were substantially downgraded amid
the global financial crisis, but Fortescue says they are now back
on the table.
Mr Forrest remains characteristically bullish that the plans can
be delivered, despite the company recently being unable to secure
debt funding from Chinese banks.
He told reporters on Monday that the door remained open for
potential deals with such entities.
He also said the company had been offered "very significant
sources of capital from the traditional markets like the United
States".
"There is considerable capital available there and across Asia,"
he said.
Mr Forrest said the company would have little need for external
finance while operating its first two mines, but funds would be
sought when it began to develop its highly prospective Solomon
project, also in the Pilbara, in several years.
Mr Taylor said Mr Forrest had good relationships with potential
Chinese funders and had back-up financing plans, while operational
concerns were being assuaged by diversified production.
"I"m a long-term bull on Fortescue and think it has got plenty
of legs," Mr Taylor told AAP.
"There are record levels of demand for iron ore coming out of
China at the moment and that is expected to grow, so obviously they
are leveraged to that.
"Their funding seems to be under control and their expansion
plans, despite a few haircuts, also seem to be on track.
"It's a difficult market to be in, but I think they are doing
their best."
Mr Forrest told reporters that iron ore price negotiations for
the contract year beginning April 1 were expected to be "going into
a strong market".
He also said the door was open for a possible joint venture in
the Pilbara with Flinders Mines Ltd, whose main project neighboured
Fortescue's Solomon iron ore project.
This could be similar to the joint venture Fortescue and BC Iron
Ltd entered into in August for the Nullagine project in the
Pilbara.
Under that deal, Fortescue secured a half stake in the project
in return for the provision of rail haulage, port handling and
ship-loading facilities.
On Tuesday, a Fortescue spokesman downplayed reports the miner
may seek to blend its coarse fines iron ore with the ultra-fine
iron ore of Brazilian giant Vale to suit Chinese steel mills.
"We're not involved in any talks (with Vale)," the spokesman
told AAP.
AAP rlm/jmc