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580 jobs lost as SA mine axed

Jan 23, 2015
The former OneSteel iron ore mine near Whyalla.

The former OneSteel iron ore mine near Whyalla.

Hundreds of jobs are set to be lost in South Australia after Arrium Mining this morning dropped the axe on its Southern Iron operation.

Arrium – formerly known as OneSteel – told the ASX it was “mothballing” the iron ore mine at Peculiar Knob around 90km from Coober Pedy, and “optimising its lower cost Middleback Ranges operation” near Whyalla.

A total of 200 full-time jobs – 30 per cent of the company’s mining workforce – will go, along with 380 contractor positions, the company announced.

InDaily understands the bulk of the jobs will go from the restructured Whyalla operations. Many of the contractors are understood to be foreign workers on 457 visas.

South Australian mining minister Tom Koutsantonis expressed his disappointment in the decision and promised assistance to the affected workers.

“My thoughts are with the affected workers, contractors and their families who are receiving the news today,” he said.

“I have spoken directly with Arrium Mining’s Chief Executive and expressed my disappointment with the decision.

“Arrium has indicated it will honour all employee entitlements and look at opportunities for deployment of affected workers, where possible. The Department of State Development will provide assistance to workers affected by the announcement.”

He said the collapse in global iron ore prices had put “enormous pressure” on mines across Australia.

“The State Government is committed long term to the resources industry and will continue to create opportunities for companies to thrive as global commodity prices recover,” Koutsantonis said.

The restructure will cost Arrium $70 million in 2015, while the company will take a $1.335 billion hit – an “asset impairment charge” – to its half year result.

In September, Arrium shares plunged more than 25 per cent in response to a $754 million capital raising bid to pay down debt.

CEO Andrew Roberts said in a statement: “This business is able to move to a lower cash cost operation through its flexibility to alter volumes, grades and costs.”

The “re-design” is scheduled for completion by June.

 

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