In a sign of the challenges facing iron ore companies, one explorer has decided to walk away from developing the commodity.
Centrex Metals Limited today announced a detailed review of the non-cash carrying values of its South Australian iron ore exploration assets resulted in a $17.4 million writedown.
The company says it will now focus on the nearer term development of the Oxley Potash Project in Western Australia, and look towards options available to recoup value from its iron ore portfolio.
Centrex has two joint venture iron ore projects located in the Eyre Peninsula, South Australia – the Eyre Iron Joint Venture and the Bungalow Joint venture.
According to the Centrex website, the projects are at the feasibility stage.
It also has two projects in the exploration stage – the Middleback ranges tenements and Cockabindie and Cockabindie North.
Benchmark iron ore for immediate delivery to the port of Tianjin in China was last trading at $US60.60 per tonne, but analysts are predicting a fall.
ANZ says the commodity is likely to fetch $US53 per tonne in coming months, while Goldman Sachs was even more bearish, stating iron ore will average $US49 a tonne in the third quarter.
At these prices, it is unlikely any new iron ore projects not already committed will get off the ground – while some established projects are battling to survive.
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.
However contractors McAleese, MACA, BGC and Qube stepped in to help cut costs and keep the miner afloat, with mining now back underway at Wodgina, Abydos, and Mount Webber mines.