FMG slashes costs to deal with iron ore price slump

FMG has moved to slash capital expenditure by $US650 million as the price of iron ore remains at five-year lows.

The company said it would look for savings by reducing exploration and focusing on efficiencies at the construction of Anderson Point Berth.

It also deferred the detrital processing plant at Solomon, and said it would target cutting other areas of operational capital spending.

Meanwhile FMG flagged its intention to "investigate alternative ownership and funding opportunities" for some of the $US275 millionvery large ore carriers (VLOC)it ordered earlier this year.

Predicted capital spend was previously forecast at $US1.3 billion and CEO Nev Power said the cuts were aimed at deferring investment which would increase supply into the market.

Power said that as market conditions improve, deferred projects would be restarted with little impact on total expenditure.

The cuts come as an analyst out of China warned the price of iron ore could fall to lows of $US50 a tonne.

Shanghai Jianfeng vice-president Liang Ruian said oversupply coupled with a slowing property market in China could mean the price rout lasted for 10 years. 

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.