FMG has dispelled rumours it is closing Cloudbreak mine in Western Australia after an analyst said the miner was considering mothballing the high cost operation.
In a statement sent to Australian Mining, an FMG spokesman said:
“Fortescue is not closing Cloudbreak. All of our mines are profitable. This report is based on speculation from an analyst with no connection to Fortescue.”
The rumours started after a news piece written by the WAtoday which quoted Standard Bank's bulks analyst, Melinda Moore.
Moore said FMG had been rumoured to reduce its output to 120 million tonnes by “closing its higher cost Cloudbreak (40mtpa) mine”.
"This could reduce the miner's break even price on a China CFR basis from $71/t to below $65/t (savings on costs/moisture) and also assist in significantly reducing market supplies,” she said.
The price of iron ore has been in a free fall this year, dropping by close to 50 per cent since January.
It is now sitting at around $US68 a tonne, a level which is believed to be making most iron ore operations unprofitable.
Speaking to one of the workers on site, he told Australian Mining the rumours were ridiculous.
"[These rumours] have caused a lot of uneccesary stress amongst workers, which creates unsafe work environment [sic]. FMG is a great company to work for".
He added: "We've heard it all before in 2009 and 2012 but here we are still going."
In the report, J Capital suggests FMG’s costs per tonne are $US7 higher than the company claims and that the investment group doesn’t believe that FMG has its debt down by $US3.1 billion.