Iron ore
A labourer shovels iron ore into a steel ladle at Wuhan Iron and Steel Group in the capital of central China's Hubei province, October 17, 2007. Reuters/Stringer

Fortescue Metals chief executive Nev Power has said Australia can find its next biggest source for iron ore demand in India. Currently, China serves as the Australia’s largest customer.

Power commented on India’s progress, referring to the country as “the fastest growing economy in the world.” He said India’s growth stands at 7.6 percent. Although it is considerably behind China at the moment, Power forecasts that the demand for infrastructure and commodities will likely increase in the future.

“We are seeing very strong growth rates in all of the Asian economies,” he said, speaking with The Australian. “That is where there will be tremendous growth — urbanisation and industrialisation — which will impact the demand for iron ore.”

Meanwhile, riding on strong iron ore prices, the mining giant recently announced it will pay off US$1 billion (AU$1.31 billion) of its debt. Paying off the debt will result in annual interest savings of US$38 million (AU$49.73 million), which will lower its overall cost position.

While Fortescue Metals has sold iron ore to India, the country cannot be considered a big importer of Australia’s largest export. Compared to China, whose steel industry produces as much as 800 million tonnes a year, India stands at significantly lesser 100 million tonnes per year.

Nevertheless, Power noted that the growth of the Indian economy, at 7.6 percent, is faster than China’s growth rate of 6.7 percent. “Its economy will be needing steel, as well as iron ore,” he said. “The question for India is where are they going to get their iron ore from? They don’t have a lot themselves. If steel mills are developed along the coast, it could be a potential market for us.” In addition to China, Fortescue Metals also sells iron ore to countries including India, Japan and South Korea.

In 2013, Fortescue Metals’ debt stood at US$13 billion (AU$17.01 billion). The company was able to bring it down to US$5.1 billion (AU$6.67 billion) by the end of 2016. It said last month its gearing was lower than its target ratio of 40 percent, and that it will now prioritise debt repayments over investments or acquisitions.

Meanwhile, the company recently announced it was partnering with multiple universities across China and West Australia to promote innovation in the mining and resource sector. The announcement came at the Boao Forum for Asia, on China’s Hainan Island. According to Power, Fortescue is “excited by the prospect of engaging the brightest minds from Australia and China in this new program.”