After Atlas Iron announced last week that it would close its mining and exporting operations, Sinosteel Midwest said it would also shut its Blue Hills mine this week.

The Blue Hills mine began producing in 2013 and was meant to keep production at 3 million tonnes/year for five years. However, delays in securing permits for an extension and high costs made the project vulnerable to the ongoing price downturn.

China’s state-owned trading house Sinosteel already has good access to iron ore, notably through its Channar joint venture with Rio Tinto. Sinosteel has 100% offtake rights and mine costs have been estimated at around $40/t cfr China. The heavily indebted Chinese company is also likely in no mood to cover the costs for unprofitable excess assets, Kallanish notes.

The closure of Blue Hills follows the announcement the 13m t/y miner Atlas Iron will end all mining by the end of the month. Declining costs at the surviving Chinese iron ore miners mean that, at current prices, small Australian miners are under even greater pressure than their Chinese counterparts. This has led to speculation that they may be the first to fall and in the last week those predictions appears to have been borne out by fact.

While the top two Australian miners have been continuing to churn out material at low costs, FMG has also been trying to cut costs, and jobs, in order to avoid becoming the next victim, (see Kallanish 15 April).