By Rachel Dally-Watkins
9 April, 2015
DESPITE ongoing cost reduction initiatives, BC Iron will receive assistance from the WA Government through the temporary iron ore royalty assistance program.
BC Iron announced in early April that it would receive a deferral of 50 per cent of iron ore royalties paid for the December 2014 to September 2015 quarters, subject to its freight on board received price remaining below $90 per dry metric tonne during the period.
The move would defer between $8 million and $12 million of royalties, which would be payable in seven equal quarterly installments between March 2016 and September 2017.
“Smaller iron ore producers make up an important part of the industry that has, and will continue to, generate revenue and jobs for Western Australia,” BC Iron managing director Morgan Ball said.
“We commend the state government for providing financial assistance as we seek to implement further cost reduction measures…”
Mines and petroleum Minister Bill Marmion said the royalty relief program was not a “handout”; instead it offered “temporary relief for mining companies which are actively adjusting their operations”.
“Despite recent difficulties, the iron ore sector continues to produce more than 70 per cent of Western Australia’s mineral exports by value and employs almost 60,000 people,” he said.
In its March 2015 quarter update, BC Iron stated it would continue to target further reductions and boost output in order to ride out the rapidly dropping iron ore price.
The company reported its costs for the Nullagine iron ore project (held in a 75:25 joint venture with Fortescue Metals Group) had decreased to $49 per wet metric tonne for the March quarter 2015, compared to $54/wmt for the same period in 2014, with the March costs even lower at $43/wmt.
BC Iron had cash at the end of March of $107.5 million and debt of $46.9 million; however its shares remained low at $0.31 each, compared to $4.99 per share a year ago.