Falling iron ore prices have forced Fortescue Metals Group to slash its dividend after suffering an 81 per cent fall in first half profit.
The Pilbara iron ore miner cut its dividend to three cents a share, from 10 cents and says the entire iron ore industry is buckling under the weight of weak prices and speculation about increased production.
The pure play iron ore miner is critical of rivals Rio Tinto and BHP Billiton boosting production in an oversupplied market while enduring lower prices.
Chief executive Nev Power said talk about flooding the market to drive out high cost producers was keeping prices at five year lows.
"The lower iron ore price is not benefiting anybody," Mr Power told reporters on Tuesday.
"It's drained an enormous amount out of the Australian economy and out of the industry generally and drawn it down to such low levels that it will limit future investment, irrespective of what the rhetoric is."
Weaker prices had drained cash out of all iron ore producing companies and it was also affecting domestic Chinese producers, he said.
Meanwhile, Brazilian iron ore giant Vale is looking to increase its market share, aided by weak oil prices.
"Talking about flooding the market to drive people out is creating future expectations and therefore trading on the futures market which is holding down the price," Mr Power said.
Still, he predicts Pilbara producers will not give up their market share in China and said Fortescue would maintain its margins and drive costs down.
"We'll continue to do that irrespective of what the iron ore price is but a lot of others are struggling."
The company was still making money and delivering cost reductions through productivity and efficiency improvements after making $US66 a tonne compared to $US124 the previous year.
But the miner says it can sustain its current capital expenditure of $US360 million this year.
Iron ore prices have halved in the past 12 months to about $US63 per tonne.
In light of recent cost cutting, Mr Power believes the company's safety record will improve in line with better efficiency and productivity.
"That's been demonstrated time and time again in industry," he said.
The company's gross debt was $US9.1 billion and it had $US1.6 billion cash on hand at the end of 2014.
Fortescue said a weaker exchange rate had helped to reduce costs and allowed the company to repay debt quicker.
Fortescue shares finished 4.8 per cent lower at $2.55.
WEAK PRICES HIT FORTESCUE DIVIDEND
* Net profit of $US331m, down from $1.7b
* Revenue of $US4.8b, down from $US5.8b
* Interim dividend 3 cents per share, down from 10 cents
Share
