* Low iron ore price discourages Chinese investors
* Fresh investment awaits turnaround-Fortescue chief
* Fortescue asset sales no longer a priority
By James Regan
CHRISTMAS CREEK, Australia, Nov 23 (Reuters) - Chinese investment in Australian iron ore mining is unlikely to revive until beaten-down prices for the steel raw material recover, said Nev Power, chief executive of Australia's Fortescue Metals Group FMG.AX .
Fortescue went from scratch seven years ago to the world's fourth-biggest iron ore miner with support from Chinese steel mills eager to spread raw material sources beyond Australia's established producers Rio Tinto RIO.AX RIO.L and BHP Billiton BHP.AX BLT.L .
"There is probably a point in the iron ore market where the price starts to go up again, and that's when there will be interest in investing back upstream in the supply chain," Power told Reuters on a tour of the company's Christmas Creek mine in Australia's Pilbara iron ore belt.
Analysts predict it could be years, if ever, that iron ore revisits boom-years highs approaching $200 a tonne after a surge in mine construction turned a supply deficit into a glut. Iron ore was selling for $45 a tonne on Monday.
Fortescue, which has $6.6 billion in net debt, has been open about entertaining approaches from Chinese investors for its port and rail business, but was no longer pursuing outside investment, Power said.
"With prices so low, China's interest in iron ore has all but dried up, so it's understandable," said Morgans Financial analyst James Wilson. "Apparently even so for Fortescue's rail business, which is very profitable."
Hunan Valin Iron and Steel, China's second biggest steel manufacturer, holds 14.7 percent of Fortescue's stock.
Most of Fortescue's annual output of 165 million tonnes is bound for Chinese mills, although Power said some headway was being made in diversifying sales to other Asian destinations, but the tonnage was minimal.
"Right now, most steel mills would say that it's a fairly diverse supply base ... when the iron ore price starts to climb again because demand starts to overtake supply, that's when they will be interested in investing," he said.
Fortescue has raced to cut overheads, with its so-called cash costs of production falling to $18 a tonne from $48 in 2012. Its target is $15 a tonne by June 30, Power said.
Cheaper labour, favourable movements in the U.S-Australian foreign exchange rate and more efficient mining procedures were behind the declines in cost, he said.
Chinese steel mills have long participated in Australian iron ore mining, although falling prices have had an impact.
Citic Ltd's 0267.HK Sino iron ore mine in the heart of the Pilbara is running some $10 billion over budget, while further south the Karara mine part-owned owned by Ansteel 000898.SZ has cut 15 percent of its workforce to combat low prices. (Editing by Richard Pullin)