UPDATE 1-Fortescue can slash debt even if iron price slumps -CEO

* Can cut debt comfortably at current iron ore price

* Price would have to fall to $70 for FMG to miss debt goal

* No asset sales planned to help cut debt in 2014

* To focus on raising dividend payout after cutting debt

(Adds CEO comments)

By Grace Li

HONG KONG, March 26 (Reuters) - Fortescue Metals Group Ltd

FMG.AX should be able to pay off up to $5 billion in debt comfortably this calendar year, as prices would have to drop by more than a third for it to miss that target, its chief executive said.

Fortescue, completely reliant on iron ore sales, is on the cusp of completing a massive debt-funded expansion to an annual production capacity of 155 million tonnes, and is using cash flow to pay down debt as quickly as possible.

It has already paid off $3.1 billion in debt since November out of a targeted $4 billion to $5 billion, taking advantage of strong cash flow as iron ore prices held above $120 a tonne until early this year.

Iron ore prices have since fallen to around $111, but Chief Executive Nev Power on Wednesday told Reuters the company should still be able to reach its target to cut at least $1 billion more in debt in 2014.

"At $110 we're still generating a lot of free cash from the company, so if it's above that, we would be able to do it quicker. But at $110, we still target to pay back like a billion dollars or something like that in the next 12 months," he said in an interview on the sidelines of a Mines & Money conference in Hong Kong.

Prices would have to fall as low as $70 a tonne for the company to be unable to meet that target, he said.

Some analysts have forecast iron ore to fall to around $100 this year due to a glut of new supply from Fortescue and bigger rivals Rio Tinto Ltd RIO.AX RIO.L and BHP Billiton Ltd

BHP.AX BLT.L .

Power was confident Fortescue could pay down debt this year without resorting to any asset sales.

"We wouldn't discount that as an option, but it's unlikely. We certainly are not pursuing that," he said.

Fortescue last year abandoned talks to sell a minority stake in its port and rail arm, The Pilbara Infrastructure, which it put up for sale amid a severe cash crunch in late 2012, when iron ore prices briefly dropped below $90.

Power said at the conference the company would only consider selling a stake in that business if a bidder were to come up with a strong offer.

Once the company cuts debt, it will focus on raising its dividend payout and making the business more efficient, rather than embarking on any new expansion over the next few years, he told Reuters.

Fortescue shares rose 3.5 percent on Wednesday, outpacing a 0.9 percent rise in the broader market as mining stocks rose on hopes that China may move to step up infrastructure investment to shore up economic growth.

(Additional reporting by Stephen Aldred; Editing by Jeremy Laurence and Christopher Cushing)

((Sonali.Paul@thomsonreuters.com)(+61 3 9286 1419)(Reuters Messaging: sonali.paul.thomsonreuters.com@reuters.net))

Keywords: AUSTRALIA FORTESCUE METALS/DEBT