Is Fortescue selling out its costs advantage?

Andrew Forrest and his leadership team have taken the biggest step yet in their search for a volatility-proof balance sheet. But the asset sales risk undermining their production costs.

That was when the iron ore price tumbled below $US90 a tonne and Fortescue was forced into a radical re-shaping of what had been a very aggressive debt-funded expansion plan. It mothballed some of the planned increases in capacity, carved into its cost base, began selling non-core assets and refinanced its borrowings. Only a week ago Fortescue sold a 25 per cent interest in its Nullagine joint venture with BC Iron for $190 million.

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