Fortescue Metals Group is making changes to work rosters in order to bring down costs, and has laid the blame on the frail iron ore market squarely on its competitors for oversupplying the market.
FMG said operational rosters would move from an eight days on, six days off cycle to a two weeks on, one week off cycle.
It said opportunities for internal transfers for those affected by the roster change will be fully explored to minimise the impact on affected employees.
FMG’s CEO Nev Power said the company had been forced to respond to the instability of the iron ore market by brining its costs down.
Power blamed FMG’s competitors for flooding the market with iron ore supply, a move which he says is damaging the industry.
“While Fortescue took a disciplined decision to cut its capital expansion budget last year and defer additional capacity in our system, it is the threat of oversupply in the medium term by our competitors that is causing ongoing damage to our industry, all companies in it and to the state and national economies,” he said.
Although it made a slight gain this week, the price of iron ore is still trading at lows not seen for close to six years at $US48.80 a tonne.
However another price dive is expected, with Citi downgrading the commodity to $US45 a tonne for the rest of the year.
In 2017 it predicts iron ore will average $US40 a tonne, and drop even further in 2018 to $US39 a tonne.
"Iron ore demand in China is declining with steel production down year-on-year and domestic demand even worse," Citi said.
"Prices need to fall significantly below cash costs for a prolonged period to induce curtailments. Supply should become increasingly resilient as it becomes concentrated in large and integrated producers."
The bank also slashed its price target for FMG to 70c a share from $2.20.
Speaking at a business dinner in Shanghai earlier this month, FMG founder and chairman Andrew Forrest challenged Rio Tinto, BHP Billiton, and Vale to put a lid on their current production increases, saying if they did “we'll find the iron ore price goes straight back up to US$70, US$80, US$90”.
"I'm happy to put that challenge out there, let's cap our production right here and start acting like grown-ups," Forrest said.
Power quickly came under fire for his comments by top executives in those companies as well as by Treasurer Joe Hockey and the ACCC.