FORTESCUE Metals Group believes it could reduce its debt by $US5...

FORTESCUE Metals Group believes it could reduce its debt by $US5 billion ($5.5bn) over the next year as continued high iron ore prices and its latest expansion efforts continue to strengthen its balance sheet.

Speaking at the company's Solomon iron ore hub in Western Australia's Pilbara region yesterday, Fortescue chief financial officer Stephen Pearce said he was increasingly confident the company could exceed expectations around its debt repayment plans.

"We've been pretty public in saying that we're going to work through our debt profile and pay our debt down, so you shouldn't be surprised in coming months when we issue more debt recall notices," Mr Pearce said.

Fortescue had previously flagged it could repay $US2bn in debt over the next "several" months, while chairman Andrew Forrest last month said he believed the company could pay down $US4bn over the "next couple of years".

The debt repayments may soon extend to part of the company's $US5bn term loan.

"There's been a lot of analysis by a lot of the brokers that we could reach our target of repaying that $4bn-$5bn by this time next year, and I'd like to think that we could surprise to the upside on that," Mr Pearce said.

Such headway on the debt repayments would position the company to materially lift its dividend payout ratio from about 17 per cent at present to 30 to 40 per cent.

"If we get our debt down to where we want it to be in 12 (months), there's no reason why we wouldn't step the dividend up right away," Mr Pearce said.

The company yesterday marked the start up of operations at its new Kings mine, the last piece of its plans to lift company-wide production capacity to 155 million tonnes a year. Kings will produce about 40 million tonnes a year once it hits capacity.

Chief executive Nev Power said the company would not be tempted to pursue other major growth projects in the short term, with the group instead to focus on debt repayments and increased dividends.

Any growth in output would instead come from incremental improvements and de-bottlenecking of the existing operations.

Mr Power said Fortescue had recently moved past Brazilian iron ore major Vale on the cost curve, according to data from consultancy Metalytics.

He also noted that while the company had not completely shut the door on asset sales, it would take "a very, very good deal to attract us".

The Kings mine is the first Fortescue mine to feature autonomous trucks on site. A dozen of the driverless vehicles are being trialled in the expectation of improving productivity and efficiency.

The trial has had teething problems, with the fleet temporarily brought to a standstill yesterday as a result of a computer crash.

The reporter travelled to Kings as a guest of Fortescu

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