Dark day for iron ore miners
Low iron ore prices have begun to bite at WA's mine sites, with Atlas Iron and Cliffs Natural Resources both understood to have stood down workers this week as part of cost-saving drives.
The retrenchments came on a dark day for resources, with Australia's chief commodity forecaster declaring the days of triple-figure iron ore prices were over and the Chinese owners of the $3 billion Extension Hill magnetite project putting the play on ice.
Atlas would not comment on redundancies made at its Pilbara operations this week but sources close to the company confirmed about 75 workers, including contractors, were retrenched.
Unconfirmed reports indicate mining contractor BGC has in recent weeks also shed part of its 950-strong workforce at Cliffs' Koolyanobbing operation.
Cliffs' US head office was contacted. BGC Contracting chief executive Greg Heylen is understood to be travelling and was not available for comment.
The Mid West's iron industry also took a blow yesterday when Asia Iron shelved Extension Hill because of an "elevated level of caution" in China over financing overseas investments, particularly iron ore projects.
The company said its backers, led by majority owner Chongqing Iron and Steel, remained committed to the project in the long term.
Yesterday's news came as the Bureau of Resources and Energy Economics used its quarterly update to cut forecast prices.
Only three months ago the bureau was forecasting iron ore to average $US105.20 a tonne through 2014 before edging down to $US96.50/t in 2015.
The bureau yesterday said iron ore would average $US93.60/t this year before rising slightly to $US94.30/t next year.
Over the next five years it expects iron ore to average between $US90/t and $US95/t.
This year's forecast spot price is well short of the current price, which edged down overnight to a fresh five-year low of $US79.40/t.
BREE analysts noted that there was little chance of a bounce back in prices.
"In Australia alone over 200 million tonnes of new capacity has started production in the past 12 months," BREE stated.
"The increased availability of supply has altered the market dynamic and as the risk of having to pay higher prices . . . has not abated, Chinese buyers do not appear to be stocking up on iron ore as they previously did. Prices are expected to rebound from the current low levels but remain well below the high prices seen in previous years due to the supply overhang that is prevailing."
'Iron ore prices (will) remain well below the high prices seen in previous years due to the supply overhang.'" Bureau of Resources and Energy Economics
