THE more things change, the more they stay the same: Fortescue Metals' decision on Thursday to restart the development of the big Kings iron ore deposit in the Pilbara, which it suspended in September, puts it back on its old expansion track - and back on course to eventually become a cash cow.

Fortescue borrowed heavily to become the third-biggest iron miner in Australia behind its Pilbara neighbours, BHP Billiton and Rio Tinto, but the plan was only to momentarily bear a development debt load that topped out above $10 billion.

The group shipped 57.5 million tonnes of ore in the year to June 30, 2012 and, before an unexpected dive in the iron ore price four months ago, was planning to be producing 155 million tonnes a year by the middle of 2013, increasing cash flow to a point where it could rapidly pay down debt.

However, after peaking at about $US192 a tonne in February 2011, the iron ore price fell to about $US135 a tonne by July this year and in August and early September it plunged to $US86.70 a tonne as Chinese steel mills reacted to slowing demand by cutting imports and running down stocks.

At prices below $US100 a tonne Fortescue's debt reduction plan was in disarray. It could still generate a surplus over its mining costs but it could not generate enough cash to cover its all-in costs, including financing costs, and pay down its debt. Additional developments would actually make the hole larger, something Fortescue acknowledged in September when it put its 40 million-tonne-a-year Kings development on hold. With the Kings development reactivated, Fortescue is once again aiming at 155 million tonnes a year - and a strong recovery in the iron ore price is the key driver.

The September price shock was temporary, as Fortescue chief executive Nev Power and the group's founder, Andrew Forrest, predicted. The price was back above $US100 a tonne by the end of September as demand in China stabilised and customers began rebuilding stocks, and it is now back up to $US135 a tonne.

The interruption to the development of the Kings deposit means Fortescue will hit its reinstated production target of 155 million tonnes a year about six months later than originally planned. At the current iron price it is solidly cash positive, however, and the original plan is once again operational: the group once more has an interest in expanding production as quickly as possible.

The price slump also produced some positive changes inside Fortescue itself.

The group has renegotiated its debt, created a new $4.5 billion master facility and has begun raising income for debt reduction with asset sales.

It has raised $US390 million from the sale of its Solomon power station, raised another $190 million by selling a 25 per cent stake in its Nullagine joint venture to BC Iron and has begun fielding bids for a 30 per cent to 40 per cent stake in its rail and port infrastructure that could see it receive about $2 billion

If it sells equity in the rail and port infrastructure, Fortescue will then have to pay to use it - but at $US130 a tonne there is room for it to do so and the debt pay-down that a sale underwrites is arguably worth it.

Fortescue would still need prices to stay strong while it attacked its remaining debt load, of course. The iron ore price would need to stay at current levels for only about a year and a half, however, to allow Fortescue to get its balance sheet gearing down below 50 per cent, securing its future as the Pilbara's third major player.