Jobs in doubt in Koolan collapse
Disaster has struck again at the worst possible time for Mount Gibson Iron, with its Koolan Island mine flooding as iron ore dipped beneath $US70/t for the first time in more than five years.
The high-grade mine is now flooded to sea level after a section of its sea wall slumped on Tuesday, the third time in a month the wall has moved. While earlier slumps had left the wall strong enough to withstand the Kimberley high tide, on Tuesday night a section of the wall sank below the tide mark and the pit flooded.
Mount Gibson said yesterday it was still assessing the impact of the disaster. But the 2km-long pit is fully flooded, throwing doubt over the immediate future of the mine and its 350 workers.
All non-essential work was suspended yesterday, as Mount Gibson's technical teams assessed the damage to the sea wall and how best to fix the problem.
With an average reserve grade of 63.9 per cent iron ore, Koolan is the jewel in Mount Gibson's crown.
It was ramping up to a 4 million tonne a year export rate when the first wall slump interrupted production in October. A second incident this month forced Mount Gibson to downgrade its financial year production guidance by 600,000t, to between 6mt and 6.4mt, saying it would cost $5 million to $10 million and take three months to fix the damage.
Mount Gibson requested a trading halt yesterday.
Fellow mid-tier producer BC Iron also took action in response to the falling iron ore price.
Iron ore fell to $US69.60 on Tuesday night. The falling Aussie dollar brought some relief, falling to four-year lows, but benchmark iron ore prices for 62 per cent ore still sit at only $81.60.
BC Iron announced three of its non-executive directors would step down, including founding managing director Mike Young, Malcolm McComas and relative newcomer Peter Wilshaw, who only joined the board a year ago. The remaining non-executive directors had agreed to pay cuts.
BC Iron chairman Tony Kiernan said the cuts were a response to the tough conditions.
Despite Tuesday night's iron ore price falls, BC Iron shares ended yesterday 1.5¢ higher at 58.5¢. Mineral Resources gained 5¢ to $7.79. BHP Billiton and Rio Tinto posted strong gains, with BHP up 43¢, or 1.3 per cent, to $32.53. Rio shares gained 98¢, or 1.7 per cent, to $58.39.
Fortescue Metals Group ended down 2¢ at $2.79, and Atlas Iron dropped 1¢ to 19.5¢.
