Atlas Iron Ltd., the second-worst performing Australian mining company in the past year, suspended its shares from trading while it reviews operations and considers asset sales after the price of iron ore plunged.
The producer, which shipped 6.9 million metric tons of the steelmaking material in the six months through December, requested a voluntary suspension from trading on Australia’s stock exchange as it conducts the study.
“The most likely outcome is some sort of suspension of all or part of production, or further drastic cost cutting,” said Matthew Keane, a Perth-based analyst at Argonaut Securities Pty. The producer was already targeting annual savings of as much as A$120 million ($91 million) by June, it said in a February filing.
Iron ore has plunged 61 percent in the past year as larger, lower-cost producers, including BHP Billiton Ltd. and Vale SA, raised output just as growth has cooled in China, the biggest consumer. Global iron ore demand will contract this year, according to Deutsche Bank AG.
Smaller producers in Australia, including Atlas, may be forced to shutter about 50 million tons of production this year, according to Argonaut’s Keane. Rio Tinto Group, the second-biggest supplier, forecasts 80 million tons of higher cost global production will exit the market in 2015, with a further 85 million tons vulnerable to lower prices.
“Atlas has already commenced discussions with a number of its stakeholders in relation to various initiatives intended to further reduce costs and preserve value,” the Perth-based producer said Tuesday in a statement.
Ore with 62 percent content at Qingdao was unchanged at $47.08 a dry ton on Monday from Thursday, when prices dropped 5 percent, according to Metal Bulletin Ltd. That’s the lowest level since 2005, based on daily and weekly data from Metal Bulletin and annual benchmarks compiled by Clarkson Plc, the world’s largest shipbroker, for ore delivered to China.
Freight provider McAleese Ltd. is continuing to provide road haulage for Atlas, it said today in a statement.
Atlas, which is being advised by Lazard Ltd., is considering its capital structure in the review and plans to make an announcement in the next two weeks, it said in its statement.