The Daily Telegraph reported that China could be coming to Fortescue Metals Group's rescue, with reports suggesting the iron ore miner could sell a stake in the company to its largest customer.
Unconfirmed reports have emerged that Fortescue could already be in negotiations with Chinese steelmaker Baosteel over a possible sale of up to 15% of the company. Without citing sources, the Australian Financial Review is reporting that Fortescue could welcome Baosteel as a strategic investor through the placement of shares priced at AUD 4 each.
There have also been suggestions that Fortescue is reportedly looking to sell its Pilbara trains and trucks to either Kerry Stokes' Westrac business or to rail operation QR National is a move to bolster its cash reserves.
Fortescue has since confirmed it is in the process of talking to its lenders about potential waivers to its banking covenants, which it said are put under pressure by extended volatility in the iron ore market. The miner did stress that is was in compliance with its banking covenants, with the next review date at the end of the year. The spot iron ore price has slumped over recent months, with the current price at AUD 96.10 a tonne, down by 2% on the previous day.
Last week, Fortescue surprised the market by announcing around 1000 jobs would be cut from its Pilbara iron ore operations, and that its expansion plans would be curbed to 115 million tonnes per annum as opposed to earlier plans of 155 million tonnes per annum.