Australia’s Atlas Iron implements measures to improve iron ore quality

Source: PLATTS

Australia’s Atlas Iron received positive results from its trial of improving product quality by lowering impurities, while still on track to meet its fiscal 2017-2018 shipment volume and cost guidance, the company said in a statement Tuesday.

“Trial shipments have performed well, with early evidence supporting Atlas’ view that this product will be priced at a premium to conventional Atlas fines,” the company said in the statement to the Australian Securities Exchange.

Atlas is aiming to lift lump production rates to over 50% of all iron ore shipped before June 2018, which is higher compared with its fiscal 2017-2018 guidance of around 40%.

Atlas ceased mining at its Wodgina and Abydos mines in May and October, respectively, and has been ramping up volumes from the Mt Webber mine, which is further from port.

It’s expecting that the pricing premium it receives from the improved product will “more than offset” any increased costs associated with supplying the product.

“We are increasingly confident that this strategy will enable us to reduce the price discounts applied to our fines products while at the same time continuing to enjoy robust margins on our lump product,” Atlas’ managing director Cliff Lawrenson said in the statement.

Meanwhile, Atlas said it remains on track to meet its volume and cost guidance for fiscal 2017-2018, which it had set last August.

The company is expecting to ship 9 million-10 million wet mt of iron ore in fiscal 2017-2018, having shipped 5.2 million wmt in the first-half to December 2017.

C1 cash costs are forecast at A$37-$39/wmt ($29-$30.58/wmt) FOB, with costs reaching A$37.8/wmt FOB in H1 to December 2017.

Full cash costs are expected to average A$54-$58/wmt CFR China for fiscal 2017-2018 compared with the A$56.7/wmt CFR China the company had already achieved in H1 to December 2017.

Last month, Atlas reported that it had achieved an average price after hedge impacts of A$58/wmt in the October-December 2017 quarter, which was A$1 lower than its full cash costs for the period.

Source: PLATTS