16/05/2008 - Fortescue Metals Group Ltd has vowed to stay Australian-owned and to resist being taken over by a foreign entity amid rumours its Chinese offtake partner Baosteel planned to take a stake in the company.
Fortescue chief executive, Andrew "Twiggy" Forrest - Australia's wealthiest person - made the comments as the company on Thursday loaded its first shipment of commercial iron ore on schedule in Port Hedland, Western Australia, proving skeptics wrong.
The 180,000-tonne shipment was witnessed by representatives of Baosteel, China's largest steel mill, media mogul Kerry Stokes and Western Australian Premier Alan Carpenter, and will reach Baosteel by the end of the month.
Forrest was responding to ongoing rumours in Chinese publications, including The South China Morning Post and influential financial magazine Caijing, that Baosteel planned to acquire a significant stake in Fortescue.
"Fortescue was Australian born and bred and I think it will always be an Australian-owned company, and the Chinese are most welcome to participate," Forrest, a former stockbroker and descendant of WA's first premier, told journalists.
"I'm not here to say they (Baosteel) have a particular interest in buying shares but they are most welcome to.
"We have encouraged Chinese investment in our company for a very significant period and we don't depart from that."
Continuing his mantra advocating open access to port and rail infrastructure, Forrest said BHP Billiton Ltd's proposed takeover of Rio Tinto Ltd was effectively an admission that Pilbara companies would be more effective if they worked cooperatively.
Fortescue has so far been successful in its push, winning court proceedings and the support of the National Competition Council.
"We have taken great delight in Rio Tinto and BHP formally admitting the tremendous synergies that are available if the three companies ... (BHP, Rio and Fortescue) cooperate in the development of the Pilbara," Forrest said.
"We would compete as Australians much more effectively than we ever have against our sovereign competitors.
"That is why Australia has lost so much market share - it's not because our iron ore isn't the best or the closest (to markets)."
He said Fortescue would seek intervention from the Australian Competition and Consumer Commission (ACCC) if the proposed mega-merger worsened the massive "barriers to entry in the Pilbara".
"If this barrier was to be raised again, yes, we would consider a very significant appeal," he said.
"However, at this stage, it's a wait and see attitude at Fortescue.
"We have faith that logic will rule the way for BHP, and that in the end we can move for a much stronger Pilbara as opposed to simply looking after one company to the detriment of all others."
Fortescue's initial production target is as much as 55 million tonnes a year, a rate it expects to reach by the end of calendar 2009.
A company spokesman said Fortescue could produce up to 17 million tonnes between now and the end of this calendar year.
It aims to export at a rate of two million tonnes per month "in the next two to four months", Forrest said.
"Then we'll gradually move it to three million tonnes, then 3.8 million tonnes, and we're aiming to hit that 3.8 million tonne rate in the last quarter of this year.
"We will trend up to four, then close to five million tonnes, by the end of next year."
He said the company was studying several substantial expansion opportunities but it would not consider implementing them until the project was operating smoothly.
Forrest said he was very proud to have delivered the three-and-a-half year project on schedule.
The mammoth undertaking included the construction of a vast rail network and cost about $4 billion, including financing costs, debt servicing requirements and pre-commitment expenditure.
Some of the proceeds from the first load of ore will be donated to the victims of the recent earthquake in China's Sichuan Province.
Source: AAP NewsWire
