none

STEELWORK FUTURE IN DOUBT AS MT GIBSON AND ARRIUM IRON ORE LOSSES STILL AT LARGE

17-02-2016
by 
in 

The steelwork industry is still in trouble as reported losses are large for iron ore miners, Mt Gibson and Arrium, as prices remain under $US50 a tonne.

Previously known as OneSteel, the South Australian company, Arrium has reported an after tax loss of $235.8 million for the half year to the end of December. Although this was down from the $1.5 billion lost last year, the companies $24.1 million loss, was down another 7.6% on the same period a year ago.

They are in the process of terminating hundreds of jobs in order to minimise losses, thanks to falling iron ore prices.

Asset value write-downs and the cost of redundancy is all part of the company’s net loss.

The iron ore sector of the company was hit with a pre-tax and pre-interest loss of 20 million.

The average ore price at the end of last year were at $US43 a tonne, the company’s total cost of production was at $US57.60, providing obvious reasons for the company’s loss.

With the massive loss in the iron ore sector, Arrium has seen a seen some benefits to its steelmaking division, with a reported a 238% rise in underlying pre tax and interest earnings.

However, Arrium has said its Whyalla steelworks is the division that is loosing money, with a reported loss of $43 million, blamed on the falling Asian steel prices.

Although there has been a $100 million cost reduction identified in October, alongside the removal of hundreds of jobs, they still need another $60 million to breakeven with current steel prices.

With plans to put the steelwork in care and maintenance, to shut down the steelmaking operations, the plans should be completed by the middle of year.

Arrium has said that they will take the action if steel prices do not improve, costs are not minimised, and if there is not enough government support.

Similarly, Mt Gibson is struggling with the company reporting a net loss of $15.4 million for December half year, which is an improvement from last year.

The company has said that it will continue the operation even with the current iron ore prices.

Related news & editorials

  1. 11.07.2018
    11.07.2018
    by      In
    “The National Electricity Market is largely broken and needs to be reset,” said ACCC Chair Rod Sims in launching the final report of the Australian Competition & Consumer Commission’s Retail Electricity Pricing Inquiry.
    Sims went on to acknowledge that: “Previous approaches to policy,... Read More
  2. 05.07.2018
    05.07.2018
    by      In
    The Department of Industry, Innovation & Science has released the second in its series of three Industry Insights reports for 2018 - Globalising Australia. The report, which comes from the department’s Office of the Chief Economist, concludes that future growth opportunities will come from... Read More
  3. 02.07.2018
    02.07.2018
    by      In
    Australian manufacturing has continued its run of month on month growth, with the Ai Group’s Performance of Manufacturing Index sitting steady at 57.4 for June 2018. This marks the 21st consecutive month of growth, which is the longest such run since the 50 continuous months recorded from July 2001... Read More
  4. 27.06.2018
    27.06.2018
    by      In
    Small Business Minister Craig Laundy MP has named the recipients of the latest round of commercialisation grants under the Federal Government’s Entrepreneurs' Programme.
    Grants worth more than $3.2 million have been offered to help six Australian businesses with commercialisation activities to... Read More