Iron tumble hits trucks
Unstable iron ore prices are continuing to hurt Australian industries, with a number of local trucking firms forced to make bold moves in response.
Heavy Haulage Australia (HHA) – which is half-owned by McAleese Group – has announced it will wind up its operations after being placed into liquidation last month.
The decision will lead to job losses for 70 HHA staff, and comes after several potential buy-outs fell through.
Meanwhile, Atlas Iron says its contractors will be shielded from iron ore’s drop in value.
With the mineral falling below US$50 a tonne - a level at which most consider mining becomes unviable - Atlas has reiterated that it has forward sales options, or ‘put options’, above that.
It also says the falling Australian dollar will help its bottom line.
Atlas managing director David Flanagan says its pricing strategies have reduced its exposure to iron ore price volatility, allowing the company to complete its capital raising and production ramp-up.
“This approach provides Atlas and investors with greater certainty in respect of the prices we will receive and therefore the extent of our margins and cash flows in the near-term,” Flanagan said.
“At the same time, we have retained some exposure to iron ore price upside.”
“While Atlas’ sales strategies provide greater certainty of price over the current quarter (and some sales in the December quarter), pricing outcomes beyond this period cannot be guaranteed and are uncertain," the company says in a stock exchange announcement,” it says.
“Atlas’ ability to continue to extend the current forward sales and pricing strategy will be dependent on iron ore physicals and derivatives market conditions; accordingly, no representation is made as to the company's ability to do so.”