Staff, costs cut at BC Iron’s Nullagine iron ore mine in Pilbara

BC Iron has slashed dozens of jobs at its West Australian mine and head office as it reduces costs amid weak iron ore prices.

Diggers & Dealers 2013. Tuesday 6 August. Morgan Ball - Managing Director BC Iron Limited

BC Iron has slashed dozens of jobs at its West Australian mine and head office as it reduces costs amid weak iron ore prices.

The Pilbara miner is the third mid-tier iron ore operator to shed jobs in the past week, following hundreds of job losses at Atlas Iron and Mount Gibson Iron.

BC Iron said amid the challenging environment for iron ore, the company has been focused on reducing costs at the Nullagine mine, a joint venture with Fortescue Metals.

BC Iron is understood to have cut up to 15 full time staff and 26 contractors hired by Watpac.

“We have had to make a number of tough business decisions recently, but our strong focus on reducing operating costs and capital expenditure is a critical part of managing our business in the current iron ore price environment,” BC Iron managing director Morgan Ball said.

BC Iron lowered its all-in cash cost guidance for the remainder of full year 2015 to $54 to $61 per wet metric tonne.

The cost reductions would deliver savings of $2 to $3 per wet metric tonne, the company said.

Iron ore prices have almost halved so far in 2014, and BC Iron’s recent quarterly update showed it was struggling to break even at current prices.

BC Iron has also reduced full year capital expenditure for the Nullagine joint venture, with its share now estimated at $13 million to $16 million.

This represents a $10 million reduction compared to the original guidance range for BC Iron’s share of $23-26 million.

Still, it maintained its sales guidance of 5.2 million to 5.6 million wet metric tonnes.

BC Iron has a 75 per cent stake in Nullagine, with Fortescue Metals Group holding the remaining 25 per cent.

The company said the key cost savings measures implemented include “assessment of the mine plan, the termination of a higher cost road haulage contract, termination of a number of consultancy contracts, prudent management of all contractors and consultants, and redundancies at site and head office”.

Last month, BC Iron announced the resignation of three non-executive directors, and a reduction in fees for the remaining non-executive directors.

BC Iron’s shares gained half a cent to 40 cents.

Watpac’s managing director Martin Monro confirmed a reduction in staff numbers.

“We have continued to work with BC Iron to drive costs down, consistent with their strategy and reflective of the iron ore price environment we are in,” he said.

Originally published as Staff, costs cut at BC Iron’s Nullagine iron ore mine in Pilbara