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Australia's Atlas cuts 30 jobs on weak iron ore prices
June 26, 2014 / 9:01 AM / in 3 years

Australia's Atlas cuts 30 jobs on weak iron ore prices

SYDNEY, June 26 (Reuters) - Atlas Iron Ltd has cut about 30 jobs from its operations in Australia in a bid to reduce costs as prices for iron ore weaken amid a mounting supply glut.

The move by Atlas, a relatively small producer in the Pilbara iron ore belt, with an annual production target of about 10 million tonnes, follows a series of layoffs by sector major BHP Billiton , which is also grappling with iron ore prices that have tumbled by nearly a third since January.

Atlas Managing Director Ken Brinsden said the job cuts come as the company nears completion of expansion work at one of its mines, Webber, meaning it was moving from the construction phase to one focused on production.

“As project development gains pace down the track, our workforce will again change with it,” Brinsden said in a statement emailed to Reuters.

“This approach ensures that we keep a tight lid on costs across the cycle while at the same time enables us to have access to the labour needed to take full advantage of our growth opportunities.”

BHP employs about 16,000 people in its iron ore division. It is looking at further layoffs after eliminating 170 mining jobs and 100 office positions this year.

Iron ore .IO62-CNI=SI stood at $93.70 a tonne on Wednesday, having stayed below $100 for more than five weeks.

Brinsden has previously said he expects iron ore to average between $100-$120 a tonne over the next several years, but maintains price swings were inevitable given the spot indexing system.

The company has provided cash operating cost guidance of $49-$52 a tonne, though additional “all-in” costs leave less room for profits.

Sea-traded iron ore supply growth of 10 percent over the next 12 months should continue to outpace demand growth, according to Jefferies.

Australia’s Bureau of Resource and Energy Economics this week dropped its price forecast for iron ore to $94.60 a tonne in 2015 from a previous forecast of $100.80, citing growing competition to sell into China’s steel market.

Although steel production in China is forecast to increase in 2015, competition among iron ore exporters to sell their additional production is expected to intensify. (Reporting by James Regan; Editing by Muralikumar Anantharaman)

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