Mid-sized miner Atlas Iron floored by iron-ore prices’ fall to lowest levels in a decade
SYDNEY—The sharp fall in iron-ore prices claimed a major casualty in Australia when Atlas Iron Ltd. said it would shutter all its mines and halt exports to Asia.
Atlas was worth nearly 4 billion Australian dollars (US$3.1 billion) as recently as 2011 but has been losing money rapidly as iron-ore prices fell 30% since the start of this year to a decade-low. That raised concerns about its ability to repay debts if it continued digging up ore.
The Perth-based company joins a raft of small- and mid-sized iron-ore producers squeezed by the rapid decline in spot prices. Australian steelmaker Arrium Ltd. has been forced to shutter one of its two iron-ore mines here, while Cliffs Natural Resources Inc. recently suspended a mine in Canada. Cliffs has been restructuring its U.S. business to focus on domestic iron-ore sales rather than competing in the seaborne market.
Even major producers such as Rio Tinto PLC have been slashing costs and jobs as they grapple with the deepening market downturn.
Fortescue Metals Group Ltd., the world’s fourth-largest iron-ore exporter, was last month 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.
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