Atlas Iron has cut its production targets for its financial year and predicted a weak start to its second half.
The Pilbara-focused miner blamed the effect of Cyclone Heidi for reducing its forecast iron ore shipment to between 5.5 million tonnes (Mt) and 5.7 Mt for the year to June 30.
The forecast is down from 6 Mt previously.
Atlas chief commercial officer Mark Hancock said that despite price volatility and an uncertain global environment in 2011, the company remained confident about demand remaining strong for the steelmaking commodity.
“First quarter expectations could be a little soft and we don’t see it getting to the highs of 2011 over 2012, but equally we expect a pretty solid year,” Mr Hancock told reporters in a teleconference.
Managing director David Flanagan said the company was in a strong position, achieving cash costs in the December quarter within guidance of $US42 to $US45 per tonne.
However, he said constraining costs would be the main challenge as the company carried out expansion activities, including opening new mines and increasing production from less than 6 mtpa to 46 mtpa by 2017.
Atlas is one of Australia’s biggest iron ore companies, behind the three majors: BHP Billiton, Rio Tinto and Fortescue Metals.
Mining, haulage and shipping were hit by the cyclone at Port Hedland a fortnight ago.
A ship-loading facility was damaged but was due to start operating again on Thursday, the company said.
Atlas shipped 1.39 Mt of ore in the three months to December 31, down five per cent from the September quarter.
A crusher breakdown at its Wodgina operations contributed to the fall.
Iron ore sales in the December quarter of 1.39 Mt were down from 1.46 Mt in the September quarter. Atlas Iron was down 14 cents at $3.12 on Wednesday.
Mr Hancock said he forecast iron ore prices of $US120-150 per dry metric tonne compared with $US120-180 in 2011.
“Demand is very strong at a certain price, the actual consumption rate is as strong as ever,” Mr Hancock said.
A major obstacle is finding new ways to transport the iron ore by rail and port.
Chief development officer Ken Brinsden said he hoped the company had gone a long way towards rail solution (by using other companies railways) by the end of the calendar year.
Atlas is regarded as an attractive takeover target because of its valuable assets including port capacity and a relatively small market capitalisation of about $3 billion.
Mr Flanagan maintained a previously firm line that he was not interested in selling.
“We’re not in the business of building something to then go sell it but we’re listed,” he said.
“We don’t think we’re a fish floundering on a rock, we’re doing okay.”
