Australia’s Atlas Iron Ltd , which halted mining in April after a slump in iron ore prices pushed it into the red, said it will keep producing at two of its mines this month, supported by its contractors and a rebound in prices.

Australia’s fourth-largest iron ore miner, which has been in talks with its creditors to keep it afloat, said it would now seek more permanent arrangements with key contractors so it can operate in the long term.

Tumbling iron ore prices fell to decade lows in early April, hurt by a rise in output from mega miners as demand growth slows in China, threatening the survival of many smaller producers, like Atlas.

“The company’s operational review, while incomplete, is generating encouraging results and negotiations with key creditors (including secured creditors) are ongoing,” it said in its quarterly production report.

Analysts said the miner’s position had been improved by firmer prices and a new product it can sell at a premium, but it may benefit most from signs that mega miners may be more cautious on big production increases.

Brazil’s Vale, the world’s top iron ore miner, said on Thursday it would cut 30 million tonnes of high-cost production over the next two years with prices still wallowing near 10-year lows.

“What that really says is: ‘We’re not going to compete on price anymore.’ It’s a signal that the iron price has hit a bottom,” said Mike Harrowell, director of resources research at broker BBY Ltd.

Spot iron ore rallied 25 percent between April 10 and 28, with the benchmark 62-percent grade .IO62-CNI=SI hitting $59.20 per dry metric tonne on Tuesday, its highest since March 5. It stood at $56.90 on Thursday.

Atlas, which aimed to produce 13 million tonnes this year, said its new operating model was based on breaking even at an iron ore price of less than $50 a tonne, including its interest and sustaining capital expense.

The price rebound was partly spurred last week after world no.3 producer BHP Billiton’s flagged it would slow its long term expansion by 20 million tonnes.

Analysts do not expect rival Rio Tinto to follow suit as it has long had a mantra to keep producing at full tilt as long as it’s making a profit.

Atlas said its Abydos mine had continued operating and it would reopen its Wodgina mine, its lowest-cost operation, in May. It was assessing options for its Mt Webber mine.

It said it significantly cut costs at two of its three operations with the help of its contractors, transport group McAleese Ltd and stevedore group Qube Holdings Ltd .

The miner said it remained solvent and had not breached any debt covenants on its $275 million five-year loan which matures in 2017. Its shares, which were put on a voluntary suspension on April 7, would remain suspended.

Reuters

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