PERTH (miningweekly.com) – ASX-listed BC Iron's management will strongly focus on cost reductions in the near term to combat the volatile iron-ore price environment.

In the three months to June 30, the Nullagine joint venture (JV), in the Pilbara, delivered 1.46-million tonnes of ore, which was in line with the previous quarter’s production.

C1 cash costs at the operation reached A$49/t free-on-board, which was also in line with the previous quarter, while all-in cash (AIC) costs reached A$58/t.

However, to cut costs, BC Iron transitioned its major mining, crushing and screening contractor at the Nullagine project. The company exercised an early termination right in its contract with Watpac and appointed a new contractor.

“The June quarter results were solid given the transition in our major contractor at the Nullagine JV during the period and the ongoing iron-ore market challenges,” said BC Iron MD Morgan Ball.

“Our cost base is now materially lower as a result of changes implemented over the last six months, which is reflected in our full year guidance for 2016.”

The miner was targeting C1 cash costs of A$42/t to A$45/t at the Nullagine project for the 2016 financial year, with AIC costs expected to reach A$48/t to A$54/t.

“We are continuing to strive for further cost reductions in light of expected ongoing volatility in iron-ore prices and also remain focused on ensuring we make decisions that are in the best interest of shareholders,” Ball said.

For 2016, BC Iron was expected to produce between 4.9-million tonnes and 5.3-million tonnes of ore, compared with the 5.26-million tonnes produced in the financial year ended June.

The miner said the slightly lower production rates in 2016 would facilitate the deferral of capital expenditure associated with the higher-cost Bonie East and Coogan mesas, and would provide additional time for the evaluation of other Warrigal mesas, which have potential as more attractive new developments.