Independent Australian iron ore company Atlas Iron has announced that it has struck a deal with one of Australia’s major mining contractors, BGC Contracting, that it will enable the company to restart full production at its Pilbara mines.
Atlas Iron will resume production at three of its Pilbara operations after the miner suspended operation due to falling iron ore prices in April.
According to the ASX Announcement, the company will pay $18 million to BGC to cover the termination costs of its Wodgina mining contract, plus suspension and remobilisation costs for its Mount Webber operation.
After restarting production at Mount Webber in July, Atlas expects to produce 6 million tonnes of iron ore per year for more than eight years.
Atlas Managing Director Ken Brinsden said the resumption of production at Mount Webber was another key step in the strategy to ensure Atlas has a robust financial future and welcomed the benefit in the long standing relationship with BGC Contracting.
“With Mount Webber operating we will once again have a strong, diversified production base but with markedly lower costs,” Mr Brinsden said.
“We are firmly on track to achieving our key goals of low costs, strong margins and healthy cash flows, backed by a stronger balance sheet that will enable the Company to withstand periods of price volatility.”
Atlas and BGC are targeting to reduce costs by between 10 and 12 per cent at Mount Webber, which Atlas said will bring the operation’s costs down to around the same levels at its Wodgina and Abydos operations that have already returned to production.