Atlas Iron inks royalty relief deal

Atlas Iron has accepted the Western Australian Government’s offer of iron ore royalty relief.

The royalty relief package will see Atlas receive a 50 per cent refund of the royalties it pays in the period from the 1st of October 2014 to the 30th of September 2015, subject to the FOB-received price being less than $90 per dry metric tonne in each quarter.

Atlas’ royalty relief will be required to be paid back, without interest or premium, in seven equal quarterly instalments from March 31 2016, with the last payment due on 30 September 2017.

The WA government announced late last year that it would provide a 50 per cent rebate on iron ore royalties for up to 12 months to smaller mining businesses suffering from the impact of low commodity prices.

Atlas says that as a result of the relief program, it will be able to access a cash refund of $12.5 million for royalties paid in the December 2014 and March 2015 quarters.

Managing director of Atlas, Ken Brinsden, thanked the government for providing the relief.

“The state government’s royalty relief package supports an important segment of WA’s iron ore export industry, providing jobs, production diversity and ultimately further support for regional communities and the state,” Brinsden said.

Atlas was a high-profile victim of the iron price crash, announcing in April it would mothball its Pilbara mining operations at a cost of 600 jobs.

Since then, the company has struck deals with its contractors which saw mining restart at two of its mines, Wodgina, and Abydos.

The new agreements are expected to deliver Atlas Iron a break-even price of US$50 per dry metric tonne (dmt) for 62 per cent Fe, compared to the current benchmark of US$60/dmt, thanks to a lower base haulage rate.

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