By Rhiannon Hoyle 

SYDNEY-- Fortescue Metals Group Ltd. built up billions of dollars of debt in a decadelong quest to become what it called the 'New Force in Iron Ore'.

But after a sharp slump in iron-ore prices, those loans have left the industry's fourth-largest exporter facing a cash crunch that risks crippling the company, some analysts and investors say.

Fortescue's top ranks are now racing to reverse the fortunes of the company founded in 2003 by billionaire Andrew Forrest, one of Australia's best-known businessmen. Its market value has tumbled by nearly 65% to 5.58 billion Australian dollars (US$4.23 billion) in the past year.

Fortescue is even considering selling stakes in some of its mining assets--ending a proud policy of wholly owning the mines it operates, in contrast to rivals like BHP Billiton PLC and Rio Tinto PLC that have sold parts of their Australian mines to Asian investors in the past.

That would represent a sharp turnaround for Mr. Forrest, who launched Fortescue dreaming of breaking the dominance of BHP, Rio and Brazil's Vale SA over global exports of iron ore, a key input to steelmaking.

Mr. Forrest quickly snapped up vast tracts of rusty red land in the Pilbara region of Western Australia, iron-ore mining's heartland, and built the first railway line of its scale in the area for four decades. The company rode the commodities boom after the turn of the century and now produces at an annualized rate of 165,000 tons.

But a parallel push by BHP and Rio to increase production is pushing their younger rival to the brink. Their bet is that even if prices fall further, their low-cost operations that produce high-quality ores will remain profitable, while margins for rivals like Fortescue dwindle to the point where it makes no sense to keep operating.

Iron ore's fall is claiming casualties around the world after a 30% year-to-date fall, following a near-halving in value in 2014. Excess supply, mainly from Australia, and weaker demand growth in China, iron ore's key consumer, has caused the slide.

In Australia, Atlas Iron Ltd.--once a nearly A$4-billion company-- is shuttering all its mines while, in North America, Cliffs Natural Resources Inc. has suspended a Canadian operation.

On Tuesday, Fortescue said it would restructure the rosters of its mine workers in an effort to further reduce operating costs. The total workforce may also be reduced, it said.

The company, which carries $7.5 billion of net debt, equivalent to nearly 100% of its equity, last month scrapped a $2.5 billion refinancing, saying it couldn't agree on terms with investors.

For sure, the miner had US$1.6 billion in the bank at the end of December and its next deadline for repayment of current loans isn't until 2017. At current prices, though, Fortescue may not be able to generate enough cash to pay down its debts without a rebound in prices, analysts say. Standard & Poor's Ratings Services on Monday put the miner on negative credit watch.

The company sells its lower-quality iron ore on average at a 15% discount to benchmark iron ore prices, which stood at $48.8 a ton on Monday. It costs Fortescue about $44-$45 to ship a ton of iron ore to China, Chief Executive Nev Power said in a recent interview, though he said the company was hoping to reduce costs by $5-$6 a ton.

"[Fortescue] should have taken debt when it could as the window may have now closed, leaving either the sale of infrastructure, operating assets or equity raising as options to fund debt repayments," Citigroup said in a note.

Mr. Forrest has criticized BHP and Rio Tinto's strategy to keep churning out more ore, even suggesting recently that Australian iron ore miners should cap production to help boost prices.

Executives at BHP and Rio have pointed the finger back at Fortescue, saying its rapid expansion is more responsible for the market glut.

Investors hope to learn more when Fortescue publishes its latest quarterly operational report on Thursday. Its lead option appears to be a selldown of its mines.

"Now is the perfect time for investors who want to have certainty around production and cash flows and an operating history for those assets," Mr. Power said.

Fortescue could pocket about US$3 billion from selling 20% of its business to a joint-venture partner, according to Morgan Stanley analyst Brendan Fitzpatrick. Or it could entice an investor solely for its port-and-rail infrastructure assets, which it previously considered selling in 2013 when iron-ore prices were well above US$100 a metric ton.

Mine closures would be a last resort. Fortescue has promised not to pump any more ore into the market. Shuttering mines, though, is costly, and reducing output would increase operating costs as it forgoes efficiencies of scale.

Its hand may ultimately be forced.

"You're an above-average-cost miner, you have a poor balance sheet and you expanded at the top of the cycle. They are not in the driving seat at all," said Morningstar Inc. analyst Mathew Hodge.

"If [its larger rivals] decide to press on, the first big chunk of supply that could come out of the market is Fortescue's," he said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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