Arrium costs outstrip iron-ore prices
PERTH (miningweekly.com) – Higher costs during the quarter ended March resulted in ASX-listed Arrium Mining selling its iron-ore product at a loss.
The miner reported on Monday that average costs loaded on ship reached A$48.2/t during the quarter, up by A$2.50/t from the previous quarter. The increase in costs was owing to a short-term increase in the waste-to-ore strip ratio in some pits, as the miner transitioned its work to focus on the lower-cost Middleback Ranges operation, in South Australia.
Higher costs were also reported at the Peculiar Knob operation.
Total cash costs for the quarter reached A$66.90/t, down A$3.3/t as the miner implemented a range of cost reduction initiatives, which included mothballing its Southern Iron mining operation, in order to reset the cost base of the remaining operations.
However, with the price of iron-ore falling significantly during the last quarter, Arrium obtained an average price of $46/t.
Meanwhile, the redesign of the mining business was expected to deliver some nine-million tonnes a year from the Middleback Ranges operation, with targeted cash costs of A$37/t loaded on ship, and A$57/t delivered into China.
It was expected that the full implementation of the redesign would be conducted by the end of 2015.
Arrium noted that given the further decline in the iron-ore prices since the redesign was first announced in January, the company was now looking to identify further volume, grade or cost options to further optimise the Middleback Ranges operation.
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