Australia's Fortescue Metals launches early debt repayment to reduce costs

Australian middleweight miner Fortescue Metals announced on Wednesday it is looking to buy back 750 million U.S. dollars worth of bonds in an effort to speed up debt repayments and reduce costs.

The world's fourth largest iron ore miner will run a "modified Dutch Action" in an effort to buy back some of its senior unsecured notes due to expire in 2019 and 2022.

Fortescue's debt stood at 6.6 billion U.S. dollars at the end of September with 2.6 billion U.S. dollars in cash on hand.

"Accelerating Fortescue's debt repayment program through this tender will further reduce our interest costs while ensuring that we remain on track to achieve our initial gearing target of 40 percent," Fortescue chief executive Nev Power said in a statement ahead of the company's annual general meeting on Wednesday.

"In line with our ongoing strategy to sustainably reduce our costs, this offer further improves Fortescue's competitive position in the global iron ore market," he said.

Fortescue and global heavyweights Rio Tinto and BHP Billiton have been racing to cut costs in an effort to ride out the slumping global iron ore price.

It's been reported Fortescue's breakeven price is around 37 U.S. dollars per tonne despite it being suggested the larger iron ore miners are on a drive to further lower their production costs to between 10 to 15 U.S. dollars per tonne in fear of deteriorating prices.

The glut in global iron ore supply caused by increasing production and falling demand has seen prices drop from a high of nearly 200 U.S. dollars per tonne in 2011 to Monday's spot price of 48.21 U.S. dollars per tonne for the benchmark 62 percent fines.

The news of the debt program pleased local investors on Wednesday, pushing Fortescue's share price 11 Australian cents or 4.57 percent higher to 2.41 Australian dollars. Enditem