BC Iron has axed a mining, crushing and screening contract with Watpac as part of its strategy to achieve cost savings of between $2 and $3 per wet metric tonne across its Nullagine joint venture with Fortescue Metals.
Located approximately 150km north of Newman in the Pilbara region of Western Australia, the Nullagine Joint Venture is an iron ore mine with the capacity to export up to 6Mtpa of product.
In an ASX Announcement, the company said it had to take all the necessary measures to cut costs at the joint venture due to the plunging iron ore price which has fallen below $US50 per tonne.
“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. We thank Watpac for its services over the past five years and wish the company all the best with its current and future projects,” said BC Iron Managing Director, Morgan Ball.
The contract with Watpac is terminated three months earlier than scheduled.
Last Wednesday, BC Iron announced that it had won a temporary reprieve from falling prices with the West Australian Government’s decision to defer millions of dollar in royalty demands.
Mr Ball thanked the State Government for the necessary financial backing, saying it would allow the company to pursue its goal of reducing operational costs.
“Smaller iron ore producers make up an important part of the industry that has, and will continue to generate revenue and jobs for Western Australia. We commend the State Government for providing financial assistance as we seek to implement further cost reduction measures at the NJV during 2015,” he said.