The fallout from Atlas Iron’s decision to stop producing iron ore has spread to the miner’s suppliers.
McAleese, a transport group, today went into a trading halt while it works out the operational and financial implications of Atlas Iron’s closure.
McAleese had forecast about 40% of its 2015 earnings from moving ore to Utah Point in Port Hedland. It posted a first half profit of $52.5 million and the company has debt of $175.5 million.
Atlas announced on Friday it would this month mothball its production because iron ore prices have dropped to about $47 a tonne from more than $100 a year ago. There’s been a 24% drop between February and now.
Atlas has about 500 employees and contractors in its mines and another 75 in its Perth office. Hundreds more jobs with Atlas suppliers are also at risk.
“In light of the company’s material exposure to Atlas, a voluntary suspension is considered appropriate to ensure the market in McAleese securities is orderly and trading on a fully informed basis,” McAleese said.
Other Atlas suppliers impacted include Qube, a logistics company, which today said that Atlas suspending operations was not expected to have a material financial impact on underlying earnings during the current financial year.
“Qube’s diversification strategy by customer and product continues to mitigate Qube’s risks against such developments” the company said. No customer, including Atlas Iron, represents more than 5% of Qube’s revenues.
Qube has so far this financial year handled about 16 million tonnes out of Utah Point. Atlas Iron volumes represented about 64% of this.
Another contractor, MACA Mining and Mineral Resources, has an Atlas Iron contract for mining and crushing services generating between $4 million and $5 million per month.
However, the company says it still expects net profit for the 2015 financial year to be more than the $55.4 million in 2014. MACA cut its 2015 revenue guidance to $600 million from $620 million.