Miner and steelmaker Arrium is asking its shareholders to cough up more than A$750 million ($829 million) to pay down its debt pile in the face of sliding iron ore prices.

The company, formerly known as OneSteel, is offering new shares to investors at a 26 per cent discount as part of a $754 million capital raising.

OptionsXpress market analyst Ben Le Brun said the company had been forced to offer the massive discount to get investors on board given the current pessimism surrounding high-cost iron ore miners like Arrium.

"Basically they did that because they knew no one would be interested in it if it wasn't extremely attractive," he said.

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The capital raising is on a large scale for a company with a market capitalisation of less than A$900 million.

Arrium will use the money to pay back some of its A$1.7 billion in debt, which has become a priority in light of the sliding iron ore price.

Iron ore prices have dropped to around US$82 a tonne, below Arrium's estimated production costs of US$89 a tonne.

"Debt reduction is a key priority for the company, and today's announced capital raising reduces our debt significantly in a single step," said acting chairman Peter Smedley.

Le Brun said the price slide meant the company had little choice but to raise money.

"The company's hands really were tied," he said.

"Shareholders are damned if they do and damned if they don't take up the capital raising because it's so heavily dilutive," he said.

The company's shares, which were placed in a trading halt, last traded at A65c.

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- AAP