Iron ore miner Fortescue is taking further advantage of stronger iron ore prices by paying off another large chunk of its debt.
The world's fourth biggest iron ore exporter says it will repay $US1 billion ($A1.3 billion), or roughly half of its 2019 term loan, on March 30.
The repayment will generate annual interest savings of about $US38 million, further lowering its overall cost position, chief executive Nev Power said on Friday.
Fortescue has exploited a sustained rebound in iron ore prices to quickly unravel a massive debt pile, which stood as high as $US13 billion in 2013.
It had brought down gross debt to $US5.1 billion by the end of 2016 and in February said its gearing was well below its target ratio of 40 per cent.
The company has promised to prioritise debt repayments over investments or acquisitions.
Iron ore doubled in value over 2016 after stimulus measures in China boosted demand.
But analysts and big miners, including Fortescue, have forecast a moderation in prices over the medium term,
Despite recent volatility, the steel making ingredient continues to trade at $US86.50 a tonne.
Fortescue in February lifted shareholder payouts after half-yearly profit quadrupled to $US1.2 billion, but some analysts think higher dividend expectations could now be under threat.
"We had previously expected FMG to focus on shareholder returns, though the increase to the dividend payout now appears less likely in the near term," RBC Capital Markets analyst Paul Hissey said.
"However, the early repayment of debt is clearly positive as it strengthens the balance sheet and provides the company with greater optionality around utilising its free cash flow in the future," he added.
At 1335 AEDT, Fortescue shares were up 0.6 per cent at $6.30 each.
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