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Mining and trading major Glencore Xstrata will halt iron ore production at its Ernest Henry mine in Australia from mid-August, according to a statement released by the company on Monday July 15.
Glencore Xstrata said that the business case for magnetite production at Ernest Henry was not supported in the current market.
“Falling revenue, increasing production costs and ongoing high logistics costs in getting our product from mine to market have eroded the margins in this business,” an Ernest Henry spokesperson said in the statement.
“Further, global iron ore prices have experienced more than a 30% drop over the past two years,”
The copper, gold and iron ore magnetite mine, located in Queensland, has produced 500,000 tpy of iron ore since it started production of magnetite in 2011. Magnetite is produced as a byproduct of the mine’s copper and gold operations.
Ernest Henry is Glencore Xstrata’s only producing iron ore asset.
The mine’s re-grind circuit will be reconfigured into the copper operations to improve existing copper concentrate production.
Xstrata spent A$79 million ($84 million) on the development of the magnetite project and A$8.6 million on storage expansion at Townsville Port.
Glencore and Xstrata merged in May, creating one of the world’s largest commodities companies.
The merged company has early-stage iron ore projects in Mauritania and offtake agreements with a number of iron ore producers across the world, including African Minerals and London Mining in Sierra Leone and Ferrous Resources in Brazil.
Glencore set up a standalone iron ore business in January 2012.
Michelle Madsen mmadsen@steelfirst.com Twitter: @mmadsen_SF