Miners feel the pain as iron ore extends its fall

Iron ore miners were punished yesterday as the price of iron ore edged closer to a fresh five-year low.

Benchmark iron ore for immediate delivery to the port of Tianjin in China finished trading at $US66.30 a tonne.

This is just 70c higher than the five-year low it hit in December last year.

The falling price is wreaking havoc on the value of undiversified miners.

FMG dropped 6.47 per cent to a six-year low of $2.17 yesterday, while Atlas Iron dropped 5.71 per cent to 16.50¢ and BC Iron fell 5.94 per cent to 47.50¢.

Interestingly, the majors closed in the green with BHP Billiton and Rio Tinto closing up 2.85 per cent and 2.56 per cent respectively.

Both miners revealed record iron ore production and shipping records this week, and reaffirmed goals to push their operations even further.

This could spell more trouble for the already ailing price, and for the smaller players in the market, as excess supply and waning demand puts further pressure on the commodity.

This week CITIC was forced to writedown the value of its Sino Iron project in the Pilbara by $1.8 billion due the falling price of iron ore.

The Chinese company said it expected its February financial results to include an after-tax asset impairment of between $US1.4 billion to $US1.8 billion.

Meanwhile a major shakeup at Arrium will see its Southern Iron mining operation mothballed.

The company announced today it was redesigning its South Australian based mining operation to provide sustainable cash flow in light of falling iron ore prices.

It also announced it will be recording an asset impairment charge of $1.3 billion. 

Atlas Iron and BC Iron have both cut staff in order to deal with the price slide.

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