tlas Iron will progressively mothball its mining operations over the next few weeks before ceasing exports, after its cost-cutting program was unable to keep up with the plunging iron ore price.
The Western Australian miner went into a trading halt on Tuesday, the same day the iron ore price plunged to a 10-year low of $US46.70. The price has fallen 60 per cent in the past 12 months.
Atlas said while it had reduced its break-even point to below $US60 a tonne, “the global supply-demand imbalance for iron ore has driven prices down to the point where it is no longer viable for Atlas to continue production”.
Chief executive Ken Brinsden said the decision had been taken after talks with contractors and secured creditors.
Atlas will cease mining and crushing at its Mount Webber project next week, while mining and crushing at the Abydos project is scheduled to cease within 14 days. Operations at the Wodgina mine are expected to be completed in late April.
The company has 500 staff with contractors across its mining operations and another 75 people in its Perth office.
“To suspend our operations, with the impact that will have on so many committed and talented people, is an extremely difficult decision,” Mr Brinsden said.
“I sincerely thank all those who have worked so hard to build Atlas’s production base and those who have worked furiously to maintain Atlas’s competitive position over the past 15 months, in the face of increasingly oppressive market conditions.”
Atlas said on Friday it will continue discussions with its debt holders, who are owed about $330 million, over the potential options for restarting its mines “whether through further cost reduction where possible and/or improvements in the iron ore price”.
Atlas, founded by respected WA mining veteran David Flanagan, was seen as one of the emerging stars of the Pilbara, becoming a company worth $3 billion on the back of surging Chinese demand for iron ore. But like many junior miners it has been unable to adapt to the plunging iron ore price.