Fortescue plans will do perluasaan in produce of iron ore. To support plans the company will invesment for defrayal of $1.6 billion. Fortescue Metal Group Plans to become the biggest iron ore producer in Australian.

Chief Executive Officer Andrew Forrest, said on conference from Perth “funded only from a portion of our free cash flow with no external debt requirements at all”.

The worst credit crisis since the Great Depression may make it harder for some mining companies to finance expansions. Fortescue wants to increase production and build a second export harbor to meet surging demand from steelmakers in China.

Bloomberg news online reported, “The free cash flow of an 80 million ton operation will be in excess we think of about A$5 billion a year,” Forrest said. “You can quite comfortably take that free cash flow from your 80 million ton operation then expand it out to 120 million tons and then 160 million tons.”

Fortescue jumped 9.6 percent to A$5.70 at the 4:10 p.m. Sydney time close on the Australian stock exchange. The company has a market value of A$16 billion.

Murchison Metals Ltd., seeking to develop a A$3.5 billion iron ore project also in Western Australia with Japan’s Mitsubishi Corp., slumped 37 percent this week amid concern borrowing costs may rise. Chief Financial Officer John Westdorp yesterday said he expected Mitsubishi would be able to secure the necessary debt required for the project, likely to be about A$2 billion.

Nine Stocks

Fortescue, which has A$5.9 billion of long-term debt, is the lowest ranked of nine stocks on JPMorgan Chase & Co.’s list of Australian mining “safe havens” from turmoil in financial markets. The total cost of Fortescue’s expansion to 160 million tons at the Western Australian mine may be A$7 billion, according to a Sept. 16 report from the broker.

“It is assessing funding options - debt, equity, sale and leaseback, internal cash flow - but all but the last option have become more difficult to achieve at attractive pricing in this deteriorated financial environment,” JPMorgan said.

Three Years

Asian stocks fell to their lowest close in three years this week as credit markets seized up following Lehman Brothers Holdings Inc.’s bankruptcy filing and the U.S. government’s takeover of American International Group Inc. Since the start of 2007, global financial companies have reported more than $510 billion in credit losses and writedowns linked to the slump in the U.S. housing market and slowing economic growth.

“This is a crisis of confidence with inter-bank obligations in the western world,” Forrest said today. “May I assure you that there is no such crisis of confidence with inter-bank obligations with the Chinese banks. That system continues to work well.”

BHP Billiton Ltd. and Rio Tinto Group, Australia’s two largest iron ore producers, and Fortescue are expanding output to feed rising demand from China, the world’s biggest consumer of the raw material. Iron ore prices have gained for six consecutive years to a record and may climb 18 percent in 2009, Goldman Sachs JBWere Pty said in a Sept. 16 report.

Fortescue increased its total reserves of iron ore 54 percent to 1.6 billion tons, the company said today in a separate statement. The reserve increase will underpin the proposed expansion plans, Forrest said today.

Ore Stacker

The expansion of output to 80 million tons will involve construction of an additional train unloader, ore stacker, reclaimer, a shiploader at its port and an extension of a railroad, the company said today in a separate statement.

Fortescue reported a net loss in the year ended June 30 of A$2.5 billion on a “paper loss” because of interest payable to Leucadia National Corp. on a $400 million loan through to 2019, it said today in a separate statement.

Standard & Poor’s affirmed its fourth-highest non-investment grade rating of B+ on Fortescue following the “accounting net loss” and kept the company on a negative outlook, it said today.

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