trading halt?, page-2

WOW

5 December 2008
The Companies Officer
Australian Securities Exchange Ltd.
2 The Esplanade,
Perth, WA, 6000
Dear Sir
Fortescue Shipping Contracts
Fortescue Metals Group (“ASX:FMG” “Fortescue”) advises that consistent
with the continued prudent management of its business and in reflection of
changed operating conditions, it has exercised suspension of all of its long
term CFR shipping Contracts of Affreightment and Consecutive Voyage
Contracts on the basis of unforeseen circumstances.
The changed arrangements as a result of these suspensions, should not
affect Fortescue’s marketing program in regards to volumes of product
shipped, just the split between CFR and FOB sales terms To date
approximately 2/3rd of Fortescue’s sales have been on CFR terms but this is
likely to reduce to around 1/3rd of sales. CFR sales are where Fortescue
supplies the product on a landed basis into China whereas FOB sales are
where the customer arranges it own freight from Port Hedland to China.
The changed arrangements are in direct response to market conditions
demanding greater FOB sales.