Junior mining companies suffer as iron ore hits new low

AUSTRALIA’S junior iron ore producers are under renewed pressure as the price of the steelmaking commodity fell to a fresh five year low.

An earth mover receives iron ore from a surface miner in the mine pit at Fortescue Metals Group Ltd.'s Cloudbreak operation in the Pilbara region of Western Australia, on Monday, July 25, 2011. Fortescue Metals Group, Australia's third-biggest producer of iron ore, will release their full-year earnings on August 19. Photographer: Carla Gottgens/Bloomberg

AUSTRALIA’S junior iron ore producers are under renewed pressure as the price of the steelmaking commodity fell to a fresh five year low.

Chinese spot iron ore prices fell last night on reports that China had ordered some steel mills to cut production.

Iron ore is trading at around $US76 per tonne amid forecasts it could fall to $US70 by the end of the year.

Australia’s largest export commodity has fallen more than 40 per cent this year and last reached its current level in September 2009.

Pilbara junior miner Atlas Iron is embarking on a cost cutting drive in the face of weak iron ore prices amid thin margins while BC Iron is struggling to break even.

BC Iron and Atlas Iron realise a lower price than the benchmark spot price and incur losses well before large companies such as BHP Billiton and Rio Tinto which have lower costs.

Atlas Iron shares closed 16.7 per cent lower at 22.5 cents and BC Iron shares dropped 5.1 per cent to 84 cents today.

Larger scale miner Fortescue Metals Group lost 8.5 per cent to close at $3.03.

But the nation’s biggest mining companies were relatively unscathed, with Rio Tinto down 0.3 per cent to $60.00 and BHP off 0.1 per cent to $33.78.

Originally published as Junior mining companies suffer as iron ore hits new low