Atlas Iron will progressively suspend its mining operations this month due to the rapid fall in the iron ore price.
Atlas said it tried to avoid the drastic measure by implementing extensive cost-cutting measures across its operations, but was eventually forced to succumb to the market pressure brought forth by the global supply-demand imbalance for the commodity that has driven prices down to the point where it was no longer viable for Atlas to continue production.
Managing Director Ken Brinsden said the decision to place all operations on care and maintenance was made after “extensive consideration” of the company’s financial position, discussions with contractor and secured creditors.
“To suspend our operations, with the impact that will have on so many committed and talented people, is an extremely difficult decision,” said Atlas Managing Director Ken Brinsden in an ASX Announcement.
“I sincerely thank all those who have worked so hard to build Atlas’ production base and those who have worked furiously to maintain Atlas’ competitive position over the past 15 months, in the face of increasingly oppressive market conditions.”
Atlas will cease mining and crushing at its Mt Webber project next week, whereas mining and crushing at the Abydos project is scheduled to cease within 14 days and operations at the Wodgina mine are expected to be completed in late April.
The company said the future of its operations depend on future iron ore market conditions.
“Based on the significant percentage of global iron ore production which is now cash flow negative, Atlas expects prices will ultimately increase. However, the timing of a recovery is unclear, leaving Atlas with little choice but to take decisive action to protect its balance sheet and resource position,” reads the Announcement.
“Atlas is now in discussions with its creditors concerning options which would enable the Company’s mines to re-start as efficiently as possible in a circumstance where an operating margin can be re-established, whether through further cost reduction where possible and/or improvements in the iron ore price.”
The move to cease production jeopardises the jobs of 500 employees working across Atlas’ production assets, including direct employees and those of the company’s contractors.