Arrium redesigns operations to fend off iron-ore price fall
PERTH (miningweekly.com) – ASX-listed Arrium on Friday announced the redesign of its South Australian hematite operations, including mothballing its Southern Iron mining operation, as part of an initiative to combat the falling iron-ore price.
The company told shareholders that the redesign was aimed at maximising cash generation during the period of low iron-ore prices, by idling the higher-cost Southern Iron operation and optimising the lower-cost Middleback Ranges operation to deliver about nine-million tonnes a year of iron-ore.
The two mines currently export a combined 12-million tonnes of hematite ore a year.
“The business is able to move to a lower cash cost operation through its flexibility to alter volumes, grade and costs,” said Arrium CEO and MD Andrew Roberts.
The redesign was expected to result in a 23%, or A$11/t, decrease in cash costs between 2014 and 2016. Total cash costs were targeted to reduce by about 20%, from A$71/t to around A$57/t by 2016.
Roberts said that the business had also targeted a A$200-million, or 30%, reduction in its capital expenditure between 2016 and 2019.
“The redesign is scheduled for completion by the end of June, leaving Arrium well positioned for maximising cash generation and returning cash to the group in 2016.”
Meanwhile, Arrium on Friday also reported that about 3.29-million tonnes of ore were sold and shipped during the three months to December, at an average realised price of A$74/t.
Production from the Middleback Ranges operation was up 33% on the previous quarter, to 2.8-million tonnes, while the Southern Iron operation delivered a 14% increase in production to 1.3-million tonnes.
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