Home NewsAustralia Iron ore price crash blamed as WA mine shuts, 200 jobs lost

Iron ore price crash blamed as WA mine shuts, 200 jobs lost

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The Kimberley’s solely iron ore undertaking has began loading its final cargo right now after a administration choice to close the mine and lay off tons of of employees in Western Australia’s far north. 

The mine, about 170 kilometres south of Kununurra, is the most recent WA undertaking to fall victim to plunging commodity prices.

From an all-time excessive of $US220 per tonne for 62 per cent grade iron ore in July, the commodity has halved in value in six weeks, buying and selling as little as $US107 a tonne.

It’s estimated the closure of Ridges will see about 200 jobs misplaced and as a lot as $3.5 million a month in misplaced income for native companies throughout the area.

A man wearing yellow high vis clothing sits in Kununurra Airport
Ben Van Roon heads up operations on the Ridges Iron Ore mine close to Kununurra.(

ABC Kimberley: Rebecca Nadge

)

After re-starting the project less than 18 months ago, Indus Mining managing director Ben Van Roon stated it was a disappointing final result.

“We have been monitoring the state of affairs reasonably intently with the iron ore value falling in a short time,” he stated.

“We solely produce a really low grade 52 per cent product, so our break even level sadly was reached shut to a few weeks in the past.

“We dedicated to getting one extra ship out to see what occurs with the market [and] sadly the market has fallen even additional.”

One other setback for embattled mine

Mr Van Roon stated the closure was was notably devastating in mild of all of the work finished to construct Indigenous employment throughout the mine, haulage, and ship loading operations.

“All through late final week and early this week, we have needed to let go of all however a number of of our staff on the mine. It has been a large disappointment.”

An iron ore loader in operation.
Iron ore is moved alongside this conveyor belt to the sting of the Cambridge Gulf the place ships are loaded at Wyndham Port.(

ABC Rural: Matt Brann

)

The mine closure has been one more hurdle for the embattled Ridges iron ore undertaking, which was first put into care and maintenance in 2015 after which once more in March final yr after its earlier operators Gold Valley Iron went into administration.

The mothballed undertaking went again into manufacturing in July 2020 after Indus Mining Pty Ltd signed a mining settlement with tenement proprietor Kimberley Metals Group (KMG).

Indus has been working the mine over the previous 15 months as a part of a three way partnership with Habrok Mining and Ridges Iron Ore Pty Ltd.

Mine closure hits neighborhood laborious

The Ridges closure has hit operators of the close by port in Wyndham laborious, Cambridge Gulf Restricted (CGL), which has an extended affiliation with the Ridges undertaking.

Previous to closing its doorways in 2015, KMG shipped 6.2 million tonnes of ore out of Wyndham Port, and Indus has shipped an additional 1.7 million tones over 32 shipments since restarting mid-last yr.

CGL chief govt Tony Chafer stated they had been doing all the things they may to redeploy port employees affected by the mine’s closure.

“We have got 16 guys engaged on loading the vessels … nearly all of these guys are native conventional homeowners,” he stated.

“We’re seeing what we are able to do when it comes to transferring them to another initiatives across the East Kimberley.”

Cambridge Gulf Ltd chief executive Tony Chafer standing in front of a world map at his office in Kununurra
Cambridge Gulf Restricted chief govt Tony Chafer says he’ll do all the things he can to maintain employees on the Port of Wyndham employed.(

ABC Information: Tom Edwards

)

Mr Chafer stated it was unlucky timing for the Ridges mine, which was solely months away from starting an enlargement into the neighbouring higher-grade Matsu deposit.

The undertaking, 10 kilometres south of the Ridges mining operation, would have prolonged the undertaking’s life for an additional 4 years.

How huge will the fallout be?

The plunging iron ore costs in current weeks has additionally hit different junior miners laborious.

GWR Group, which mines at Wiluna and ships via Geraldton, suspended mining operations at its C4 Iron Ore Mine.

The 30-day suspension follows a report operational month with 139,422 tonnes of ore transported in August.

Graph showing iron ore prices
The value of iron ore has halved during the last six weeks.(

Equipped: Market Index

)

And right now, fellow Midwest miner Mt Gibson Iron requested a buying and selling halt on the Australian inventory change as they overview mining operations at their Shine undertaking “off the again of current iron ore volatility”.

The corporate solely introduced the undertaking again into manufacturing in current months, which was anticipated to ship 1.5 million tonnes over an preliminary two-year interval, with product shipped out of Geraldton.

Historical past repeating

With slowing demand for Australian iron ore from China and a restoration of manufacturing in Brazil, the value is anticipated to proceed to stoop within the coming weeks.

So what number of extra of those small operations are we more likely to see exit the market?

Based on CRU Worldwide iron ore analyst Andrew Gadd, small-scale firms which moved early to lock in iron ore costs via hedging, have protected themselves from the large drop in iron ore costs.

“The blended fortunes that we’re seeing now with the costs falling is primarily linked to the business methods of those miners,” he stated.

“And that is solely attainable when the present spot value may be very excessive, that they will lock that value in at a degree that is above their price of manufacturing.

“The small miners that have not hedged, these are those that we’re seeing exiting.”

Mr Gadd stated the cyclical nature of the commodity meant this type of monetary ache was not surprising and had been felt by different small, high-cost producers in earlier booms and busts.

When iron ore dropped to a report low spot value of $US40 per tonne in 2015 Atlas Iron suspended manufacturing at its Pilbara mine websites.

That noticed nearly 500 employees stood down earlier than the corporate was purchased out and its assets acquired by the Hancock Prospecting Group in 2018.

Solely months later, one other struggling junior, BC Iron, offered its iron ore initiatives and rebranded into BCI Minerals, utilizing the money from the sale to diversify into salt and sulphate of potash.

A truck in front of an ore stockpile.
It is hoped operations can resume at Ridges subsequent yr when the iron ore value rebounds.(

ABC Rural: Matt Brann

)

Restart depending on value rebound

Again within the East Kimberley, Mr Van Roon stated historical past dictated that costs would drop even decrease earlier than rebounding, however he remained assured the Ridges mine had a robust future within the area.

“These marginal initiatives tend to pop again into motion now and again when the market dictates,” he stated.

“However there’s undoubtedly a whole lot of potential on this space and that is why I am not de-mobilising any of our gear from the Ridges undertaking [and] we’re reaching out to anybody and everybody to see if we are able to keep up on this space.”

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