Cuts at BCIron as Mac Bank says time to die

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From The Oz:

BC Iron will cut staff at its Nullagine mine in Western Australia and head office as it reduces costs amid weak iron ore prices.

The Pilbara miner said amid the challenging environment for iron ore, the company has been focused on reducing costs at the Nullagine mine, a joint venture with Fortescue Metals.

BC Iron lowered its cash cost guidance for the remainder of full year 2015 to $47-51 per per wet metric tonne and $54 to $61 per wmt for all-in cash costs.

The cost reductions would deliver savings of $2 to $3 per wet metric tonne, the company said.

It’s all so terribly pointless…from Mac Bank today:

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The net effect of this is that the iron ore market will enter a pause in the displacement cycle over the coming months, as Chinese steel output rises. In the first instance, inventory drawdown will satiate much of the increased purchasing, but there may also need to be a mild recovery in Chinese domestic ore and/or seaborne volumes (incentivised by price). However, this is a temporary phase, and the delivery of Rio 360 during 2Q means displacement starts all over again. It is at this point that those listed companies out there who need all in price levels above $80/t on a 62%Fe basis (Atlas, BC Iron, Mineral Resources to name a few) have big decisions to make about their ongoing viability. With enough liquidity to keep on going at a loss for at least a year, this is when the efficiency of iron ore will be challenged. Should these high-cost seaborne tonnes stay in the market when fundamental conditions say they should not, the entire iron ore market will have a problem.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.