Atlas Iron cuts 100 jobs

Move comes amid miner's transition from construction to production phase of operation.

Atlas Iron has shed about 100 workers as the company ramps up production following the expansion of its Australian iron-ore mining operations.

Chief executive Ken Brinsden said the layoffs, which include many contract workers and consultants, reflected the shift from construction to a less-labor-intensive production phase in its operations.

Mr Brinsden said the job losses weren't directly related to the slump in iron ore prices to an almost two-year low recently, which he admitted was hurting Atlas's profit margins.

Prices of the steelmaking ingredient have dropped by about a third this year as rising supply -- mainly from Australian mining operations -- created a surplus in the seaborne iron ore market, giving steelmakers the upper hand in negotiations. Atlas ships mostly to China.

"It's impacted our business, no doubt about that," Mr Brinsden said in an interview Tuesday, referring not only to the price decline but the bigger discounts that steel mills were now demanding for lower-quality iron ore. "But we're already working on our cost base ... as we transition from a construction to production phase."

The iron ore market also faces uncertainty amid Chinese investigations into fraud allegations concerning metal stockpiles at the country's ports, which may lead to tighter checks on shipments and stricter conditions on bank lending to steelmakers.

Atlas said it intended, for now, to focus on working its operations harder and driving down costs in the coming six-to-12 months. That mirrors moves by larger rivals like BHP Billiton, which have pledged to squeeze more from existing mines after years spent pouring billions of dollars into new projects.

Mr Brinsden said Atlas didn't intend to make any major investment decisions in the near future. "Basically we will continue to chip away and keep an eagle eye on where the market is at," he said.

Atlas began production at its newest Australian mine, Mt Webber, late last year and said it expected to begin transporting iron ore from there to export facilities in Western Australia state sometime later this month.


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