Australian iron ore miner suspends operations
As the 2015 SME Minnesota Conference prepared to kick off in Duluth, MN, troubling news about the global iron ore industry was breaking in Australia, as Atlas Iron Ltd. announced that was shuttering of its mines and exports to Asia.
The Wall Street Journal reported that as recently as 2011, Atlas was worth nearly A$4 billion (US$3.1 billion) but the collapse of iron ore prices made it the most recent casualty of a 30 percent decline in prices this year.
Arrium Ltd. was forced to shutter one of its two iron ore mines in Australia and Cliffs Natural Resources suspended a mine in Canada as it restructures is U.S. business to focus on domestic iron ore sales rather than competing in the seaborne market.
Fortescue Metals Group Ltd., the world’s fourth-largest iron-ore exporter, was forced to scrap a planned debt sale because it couldn’t agree on terms with investors amid a sour outlook for the commodity.
In February, Atlas Iron reported a more-than-A$1-billion net loss for its fiscal first-half, swinging from a profit a year earlier as it wrote down the value of its mining assets.
At the time, executives vowed they were working hard to slash operating costs to safeguard earnings.
But ore prices have raced lower faster than many companies can cut costs. The price of iron ore, a key ingredient in steelmaking, slumped as low as US$46.70 a metric ton last week, weighed by ballooning supplies of the raw material as China’s economy cools.
Some of the world’s biggest miners, including Rio Tinto and BHP Billiton Ltd., have been aggressively expanding their operations in the Pilbara iron-ore mining hub of northwest Australia, completing major mine and infrastructure projects planned when the market was booming. Iron ore traded as high as US$190 a ton in 2011.
“To suspend our operations, with the impact that will have on so many committed and talented people, is an extremely difficult decision,” Atlas Iron managing director Ken Brinsden said.
Nearly 600 people work in Atlas’s mines and offices in Australia’s west. The company is in discussions with creditors around options for restarting its mines when they able to turn a profit, which could be supported by investigations of further cost-reduction measures, it said.