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Australian Miners Cut Back
Atlas
Iron Ltd. and Mount Gibson Iron Ltd. said Thursday they're cutting
jobs and reining in spending on projects, in the latest sign that
volatility in iron-ore prices is hurting Australia's once-booming
mining sector.
WSJ,
18
October, 2012
Atlas
also tapped debt markets for a US$325 million loan, moving to
reassure investors who had expressed concerns that a cash balance of
313 million Australian dollars (US$324 million) wouldn't be enough to
fund a doubling of its iron-ore production by the end of next year.
Australia's
iron-ore producers have been scrambling to adapt their businesses to
weaker prices and China's cooling appetite for the commodity, used in
making steel. Iron-ore prices have declined by more than 20% over the
past six months and last month traded at their lowest level in nearly
three years as Chinese steel mills ran down their stocks.
Atlas
Iron Thursday said it will cut 27 jobs and redeploy 23 others as it
curbs spending on future exploration and focuses on meeting near-term
output targets. Australia's fourth-largest iron-ore miner, it's
sticking by its plan to increase its shipping rate to 12 million
metric tons a year by December 2013, from six million tons currently.
Atlas
also said its fully underwritten, five-year loan has few restrictions
and "ensures Atlas has the flexibility to make expansion
commitments in light of its forward view of iron-ore market
conditions." The loan should be syndicated by the end of next
month, it said.
"Historically
we have taken a view that the majority of funding would come from
operating cashflow," Managing Director Ken Brinsden said on a
call with reporters. "But iron ore markets have changed... and
outlook for operating cash flow is perhaps that little bit weaker;
hence the requirement to take on the facility."
Mount
Gibson Iron Ltd., a smaller mining company, said separately it is
also terminating jobs as it slows operations to help out the fall in
prices. It's also cutting pay for senior managers.
"The
immediate market outlook remains uncertain," Chief Executive Jim
Beyer said in a statement to the Australian stock exchange. "The
only prudent course of action is to implement comprehensive measures
that control costs and enable our operations to remain cash
positive."
Mount
Gibson said it planned to reduce or defer expenditure in the
financial year through June to cut between A$120 million and A$150
million from its budget. Mining will be reduced and the company
instead plans to work through stockpiles to meet plans to sell
between 8 million tons and 8.5 million tons of iron ore for the year,
up from 5.2 million tons in the last financial year.
Mount
Gibson said it will cut its workforce by about 270 positions,
including 140 contractors, and its board members and senior executive
management had agreed to a 10% reduction in their total remuneration
package this year, it said.
Still,
like larger miners, including BHP Billiton and Rio Tinto PLC, Atlas
and Mount Gibson remained resolute in their plans to continue
shipping more ore north to steel mills in Asia. Mr. Brinsden said
Atlas's physical cargoes were continuing to be well-bid in the spot
market.
Marius
Kloppers, chief executive of BHP Billiton, Wednesday cautioned the
industry to expect mineral prices to revert to long-term trends from
the boom seen in recent years. He forecast the global market for iron
ore would grow by 650 million tons this decade, short of the
800-million-ton increase seen over the past decade, and said
companies would need to cut costs and improve productivity
if
Australia is to enjoy another round of mining investment.
BHP
has shelved or postponed billions of dollars in investment, closed
unprofitable mines and cut jobs across its operations in recent
months, but is holding to plans to invest almost US$23 billion in its
business before mid-2013.
Northrop
building Australian cybercenter
A
facility to help Australia's military develop, test and evaluate
cybertechnologies is being built by Northrop Grumman.
The
facility, for the University of New South Wales, will be located at
the school's Canberra campus at the Australian Defense Force Academy
in the National Capital Territory.
"We
are proud to contribute our extensive cyber test range experience and
capabilities to UNSW Canberra, at ADFA, and are looking forward to an
enduring partnership," said Kathy Warden, vice president and
general manager for Northrop Grumman's Cyber Intelligence division.
"This award reaffirms our dedication to providing our allies
with best-value cybersecurity solutions, and our commitment to
science, technology, engineering and mathematics education."
The
Australian Defense Force Academy is a partnership between the
military and the university for personnel of all three services and
for defense-related research.
In
making the announcement, Northrop did not disclose the value of the
contract, construction details or timeline.
Australia
commits to Poseidon development
The
Australian government formally allocated nearly $81 million toward
development of Boeing's P-8A Poseidon maritime surveillance aircraft,
the replacement for the country's ageing AP-3C Orion planes.
Minister
for Defense Stephen Smith and Minister for Defense Materiel Jason
Clare signed the Increment 3 Project Arrangement with the U.S. Navy,
Australia's Department of Defense said.
The
deal "formalizes Australia's participation in the development of
the Increment 3 P-8A Aircraft and marks Australia's continued
commitment to the $5 billion project to acquire a new manned maritime
patrol aircraft," a defense department statement said.
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