Commodity slump forces BC Iron to quit Brazilian project, revalue mines
Australian junior iron ore producer BC Iron (ASX:BCI) has decided to abandon an early stage exploration joint venture in Brazil with fellow Australian-listed company Cleveland Mining to weather the impact of plunging seaborne prices.
The company, one of the many miners of the steel-making ingredient feeling then squeeze, said Friday that it is also reviewing the value of all of its mines as iron ore prices decline to the lowest level in more than five years, with the Tianjin spot price hitting US$62.30 a tonne on Thursday.
Shares in the company have dropped over 90% over the past year, and BC Iron is expecting that continued weakness in oil prices and the Australian dollar helps it preserve margins that have all but disappeared as a result of halved iron ore prices.
Iron ore miners are under pressure because of over supply on the market triggered by the world’s top producers — BHP Billiton, Rio Tinto and Vale— ramping up production.
Despite the challenging situation BC Iron managing director, Morgan Ball, said in a statement that the company could see out the iron ore price war.
"We will continue to focus on operational performance, productivity and costs and, with approximately $70 million in net cash, we are well placed to manage the business through the iron ore cycle," he said.
The company is reviewing whether it needs to write down the value of any assets ahead of next month’s half-year result.