News Wrap

IN THIS morning’s News Wrap: No improvement in sight for coal and iron ore miners, says Cutifani; cutting costs, not acquisitions, the focus for South32; and Arrium, the latest Australian miner to be stung by take-or-pay rail contracts.

Lou Caruana

No improvement in sight for coal and iron ore miners: Cutifani

Anglo American has warned the mining industry there is no sign of market sentiment improving in the near term, with the trend for cost cutting, asset sales and job losses expected to continue into 2015, according to the Sydney Morning Herald.

Anglo CEO Mark Cutifani said the company had already reduced staff in its Australian and South African coal units by about 350 in recent years, and more cuts were likely this year.

“We've started that. We're continuing on and the program will continue through the year in terms of reductions,” he said at the weekend.

Cutting costs, not acquisitions, the focus for South32

South32 chief executive Graham Kerr says the $15 billion BHP Billiton spin-off must earn the trust of investors before pursuing acquisitions and will initially rely on cutting costs and expanding existing assets to improve shareholder returns when it lists in the middle of the year, according to the Australian Financial Review.

Kerr, who attended the Mining Indaba conference in Cape Town last week, played down speculation South32 would consider mergers and acquisitions once it shares were listed on the Australian, British and South African stock exchanges, saying new companies needed to “walk” before they “ran”

Arrium the latest Australian miner to be stung by take-or-pay rail contracts

Arrium Ltd will continue to pay for rail access long after it shuts a group of loss-making mines in South Australia, in the latest example of Australian miners being stung by "take-or-pay" rail contracts, according to the Australian Financial Review.

Arrium recently confirmed it would close its Southern Iron mines near Coober Pedy in the first half of 2015, on the back of steep declines in iron ore prices that have rendered the assets unviable.

About 600km from Whyalla port, rail access was a crucial part of the operation and the previous owner of the mine, WPG Resources, arranged the rail contracts with United States company Genesee and Wyoming at the height of the iron ore boom in 2011.

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