BC Iron has terminated a mining contract with Watpac on the same day the price of iron ore fell to $US49 a tonne.

BC said current market conditions had forced it to dump the mining, crushing and screening contract, which was originally entered into in 2010.

BC said it was obligated make a one-off contract termination payment to Watpac and purchase some second hand equipment including a surface miner and a mobile crushing and screening plant.

The termination of the contract fits in with BC’s strategy to save $2-3 per wet metric tonnes at its Nullagine Joint Venture.

In February the miner announced it was looking to renegotiate the terms of several of its workforce contracts in order to save money amid the weak price of iron ore.

“The next round of material savings will come in our retendering of existing contracts,” CEO Morgan Bell said.

“We’re expecting a reduction in the overall cost of mining and potentially haulage.”

BC cut jobs at Nullagine in December in order to deal with the falling price of iron ore, which was sitting at $US71 a tonne.

Today, the price of the commodity hit $US49 a tonne, below BC Iron’s predicted break even cost of $US61 a tonne.

BC managing director thanked Watpac for its contribution to the Nullagine Joint Venture.

“Watpac was the inaugural mining, crushing and screening contractor at the NJV and has supported the operation from start-up through to steady-state operations as an important partner to BC Iron,” Ball said.

“We thank Watpac for its services over the past five years and wish the company all the best with its current and future projects.”

Watpac will continue providing mining, crushing and screening services at the NJV until early July 2015.

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