Swiss-based Glencore Xstrata, the world’s biggest shipper of thermal coal, will suspend production at its magnetite iron ore operation in Australia from next month because of lower prices and high costs.
«Falling revenue, increasing production costs and on-going high logistics costs in getting our product from mine to market have eroded the margins in this business,» the company said in a statement on Tuesday.
«Global iron ore prices have experienced more than a 30 per cent drop over the past two years.»
The plant, which processed magnetite iron ore produced at Glencore Xstrata’s Ernest Henry copper mine in Queensland state, cost A$79 million (CHF69 million) to build, Xstrata said in February 2011.
Since Glencore’s takeover of Xstrata, the company has shed jobs in Australia, cutting about 450 coal mining positions in June.
The operation was slated to produce 1.2 million metric tonnes annually, Xstrata said in 2011. Last year, the plant produced almost 500,000 metric tonnes of iron in magnetite concentrate, the company said on Tuesday.