* Australian miners show signs of cracking
* Low iron ore prices taking toll on margins, shares
* Job cutting becoming widespread in bid to shed costs (Recasts to include other miners, short selling, shares, quotes)
By James Regan
SYDNEY, Dec 5 (Reuters) - Australia’s Atlas Iron and Mt Gibson Iron on Friday were forced to lay off workers and introduce austerity measures in an attempt to ride out a sharp slide in iron ore prices.
Mt Gibson, whose Koolan Island mine was closed last week because of a flooding incident, said it did not know when it might reopen.
Both companies, along with Fortescue Metals, were started in the last decade’s boom-era rush to dig new mines, but are now cracking under the weight of low ore prices.
Once-hefty margins that made millions for early investors are disappearing, replaced by short sellers betting things will only get worse.
Analysts see staff cuts as last-ditch attempts to stay afloat as iron ore prices tumble and margins shrink.
The fight for survival comes as the country’s biggest producers, Rio Tinto and BHP Billiton , flood markets with cheaply-mined ore.
Colin Barnett, the political leader of Western Australia state, where most of Australia’s iron ore is mined, has accused Rio and BHP of colluding to drive out competitors.
Both companies have denied working together and Rio Chief Executive Sam Walsh said in a Reuters interview the business was now simply about “survival of the fittest.”
Atlas on Friday cut 80 employees to save A$15 million. The previous day Fortescue eliminated key executive roles and placed a director on a two-month sabbatical without pay.
“Companies are doing anything they can big or small to reduce their costs,” said Gavin Wendt, a resources analyst for sector consultants MineLife.
BC Iron, whose stock is down 91 percent this year, shed three board positions on Nov 26, including that of the company’s founder.
Short sellers trade an average of between 500,000 and 600,000 of BCI’s shares daily. Fortescue and Atlas regularly lead the list of short sellers on the Australian Securities Exchange.
The stock of Atlas, which is high on analysts’ lists as vulnerable to further price drops, has fallen from A$1.18 in January to a low of $A0.15 on Friday.
“The job losses were an inevitable result of the sharp falls in the iron ore price and ensures that Atlas maintains a competitive cost base reflecting the current market conditions,” Atlas Managing Director Ken Brinsden said.
Atlas sold its ore in the previous half-year for $86.29 a tonne. Given a 30 percent drop in prices .IO62-CNI=SI since July 1, this half-year’s average promises to be much lower.
In the case of Fortescue, the board in 2007 voted for a 10-for-one stock split after shares traded above A$60, turning founder Andrew Forrest into Australia’s richest man.
This year the stock has dropped 55 percent to a low on Friday of A$2.63.
Forrest has told journalist that he did not count the money on the way up and wouldn’t count it on the way down. (1 US dollar = 1.1925 Australian dollar) (Additional reporting by Lincoln Feast; Editing by Ed Davies)