Cliffs Natural Resources has slashed its WA iron ore costs by 22 per cent in a sign that a move to off-load the ageing Cockatoo Island mine is paying dividends.
Cliffs made the revelation on Friday night alongside news it had appointed former Barrick Australia-Pacific boss Gary Halverson as chief operating officer, with a view to him later succeeding the retiring chief executive, Joeseph Carrabba.
Attributing the absence of the "higher cost mine" in the Kimberley, Cliffs said its third-quarter cash costs for its remaining WA operation, Koolyanobbing near Southern Cross, were $US59.44 for each of the 2.8 million tonnes produced, compared with $US76.65/t a year ago. Cliffs sold Cockatoo Island to Pluton Resources last year.
Cliffs said less waste movement and a favourable exchange rate had also helped the US-listed company, and should lead to cash costs of between $US65/t and $US70/t, before a $US15/t depreciation, depletion and amortisation charge, for the full-year to December 31.
The company, which gained its foothold in WA's iron ore industry through the takeover of Portman and counts former Portman boss Barry Eldridge as one of its non-executive directors, is often ignored by local investors.
But with a re-affirmed full-year production target of 11 million tonnes this calendar year - half lump, half fines - Cliffs remains WA's fourth-biggest exporter of the steel-making commodity, behind giants Rio Tinto, BHP Billiton and Fortescue Metals Group.
Its US investors were pleased with the cost reduction in Australia, which helped drive a 194 per cent increase in September-quarter operating income to $US224 million ($233 million).
Cliffs shares soared 6 per cent to $US24.99 on Friday night.
Cliffs is targeting full-year output of 20mt from its US mines and up to 9mt in Canada.It also owns coal mines.