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Fortescue Metals Group has confirmed the sale of its Solomon ore mine power station in Pilbara region, Western Australia, to Canada's TransAlta for A$294.9 million ($300m). Fortescue is trimming assets in order to raise the funds to meet its debt obligations in the face of slumping iron ore prices.
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The company has also revealed its intention to cut around 1000 jobs and cancel its expansion plans in an attempt to save up to $1.9bn this financial year.
"It was always our intention to divest the Solomon power station to an established owner and operator of power-generation assets," Fortescue chief executive Nev Power said.
The sale will give Fortescue cash upfront but increase operating costs at the Solomon project. TransAlta has said it will receive pre-financing cash returns of $40 million (A$39.7m) a year from the sale.
Despite the drastic action taken by Fortescue a severe slide in its share price has not been averted.
This week, Fortescue’s shares fell 8.5 per cent in a day, to $3.12, their lowest price since June 2009.
It was the company's biggest percentage share price slide in a day for almost a year and leaves the stock down around 50 per cent in the past five months.
Fortescue had previously said it anticipated a price floor would form for iron ore prices at the $120-a-tonne mark, a prediction which now looks unlikely; prompting the share collapse. The company maintains it is certain prices will eventually move to that level.