Minister bestows a timely break on Atlas, MinRes
The West Australian government has thrown junior miners Atlas Iron and Mineral Resources a $25 million break at the same time it slugs the state’s other exporters almost $100m in extra fees.
The government yesterday unveiled an increase in charges at ports around the state as part of its efforts to repair the budget.
Major iron ore producers Rio Tinto, BHP Billiton and Fortescue Metals are set to wear the bulk of the additional charges but there will be relief for the likes of Atlas Iron and MinRes after Transport Minister Rita Saffioti said the government would extend a $2.50-a-tonne discount on fees for users of the Utah Point berth at Port Hedland for another six months.
The discount extension will be worth about $12.5m to each of Atlas and Chris Ellison’s MinRes, providing relief when both miners are being squeezed by the sharp fall in iron ore prices.
The discount could prove important for Atlas, which is losing about $2 on each tonne of ore it exports at current prices.
Atlas on Wednesday announced it had shelved its planned $53m development of a new mine at Corunna Downs while it waited for an improvement in iron ore prices.
The headline price of iron ore has fallen more than 40 per cent since February.
Under the changes announced yesterday, fees charged at ports in the Pilbara will increase by between 3c and 4c a tonne for all users. The increase will cost Rio more than $13m a year, BHP about $9m and Fortescue around $6.8m.
The Utah Point discount was put in place two years ago by the former Barnett government and was due to expire at the end of this month.
Atlas managing director Cliff Lawrenson told
The Australian that the looming end of the fee discount had been a big concern for the group.
“We were worried about it. We had spoken to (the government) about it at length and we’re glad they’ve extended it,” he said. “They initially didn’t like it, but they understand now that at the current iron ore price we’re not breaking even.”
Before slipping into the red in the past month, Atlas had paid off around $77m in debt in the past year, putting it ahead of its debt repayment schedule.
The fee increases announced yesterday will be relatively minor for the bigger iron ore producers, who earlier this year fended off a $6 billion push from the WA arm of the Nationals for a levy on iron ore production.
Fortescue Metals chief executive Nev Power said he understood the need for the government to balance the budget.
“While we have not yet had any consultation with the minister on the matter, it is essential that any additional burden is shared equally by industry and doesn’t discriminate,” Mr Power said.