Arrium's prudence gives it some breathing space

Arrium's surprise capital raising last year has turned out to be a wise insurance policy, with the miner now able to restructure in a bid to avoid another near-death experience.

When Arrium blindsided the market with a $754 million equity raising last year, its share price was smashed and its board castigated. Without that additional capital, however, the group would now be in absolutely dire straits.

When Arrium ambushed the market with the raising, the iron ore price was above $US80 a tonne. With total cash costs within its iron ore business of around $AS71 per tonne, Arrium had some margin for error, but the margin was slim.

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