Fortescue: 3rd largest resource stock on ASX

Fortescue Metals Group (ASX:FMG) has become Australia’s third largest listed resource company, as gold miner Newcrest Mining (ASX:NCM) continues to fall.

Newcrest has seen its share price fall 42% since early February 2013, after a string of downgrades, operational issues and the falling gold price. With a market cap of around $10.4 billion, Newcrest has been overtaken by Fortescue, which now sports a market cap of $10.7 billion. Incidentally, Newcrest’s current market cap is only slightly more than it paid for Lihir Gold ($9.5 billion) back in 2010.

Still, Fortescue hasn’t had it all its own way, with the share price losing more than 29% since February 8. BHP Billiton (ASX:BHP) and Rio Tinto Limited (ASX:RIO) lead the way, well out in front, with $100 billion plus market caps.

How long Fortescue can hold onto that mark is uncertain. As we wrote yesterday, the head of China’s largest listed steel maker says there will shortly be an oversupply of iron ore, which may put pressure on Fortescue’s earnings, and put its expansion plans at jeopardy.

Fortescue is in the process of trying to sell a minority stake in its Pilbara infrastructure assets, including railways, port and operations, with the proceeds used to pay down its US$12.6 billion of debt. While the majority of the debt is not due for repayment until 2017, the company faces hefty ongoing interest costs.

Fortescue could also raise more funds if it comes to an agreement with Brockman Mining to allow Brockman to ship 20 million tonnes of ore along its tracks from late 2016. A number of other junior iron ore miners have also applied to the regulator for access to the infrastructure.

Foolish takeaway

Newcrest’s glory days may be behind it, so the gold miner is unlikely to challenge Fortescue for the title of ‘3rd largest listed ASX resource stock’ anytime soon. But, with iron ore prices almost certain to fall in future, it remains to be seen how long Fortescue can hang on to the title.

In the market for high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool writer/analyst Mike King owns shares in BHP.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.