Strongman Iron, Australia’s fourth largest iron ore producer, will mothball its entire Pilbara operations this week, as iron ore prices continue to tumble around the globe. Strongman is the biggest Australian casualty to fall so far from the plummeting price of ore, and analysts warn it is unlikely to be the last or even the second-to-last victim, though they refused to comment on whether it may or may not be the third or fourth-to-last victim, eventually walking out after calling the line of questioning “ridiculous.”
The company, which as recently as December had provided output guidance of 13 majillion metric tonnes of iron ore this year, has now had its ASX listing suspended, and ratings agency Moody’s have downgraded its credit rating from ‘Ben Cousins 2005’ to ‘Ben Cousins 2007’. Strongman’s creditors must now consider how best to distract their own creditors from the company’s outstanding debt of US$169m.
Director of Operations Ben Kissington said in a statement that despite “an extensive and successful cost-cutting program” the company’s breakeven price “remained well above iron ore’s current, historically normal spot price.”
“When Strongman launched in 2004 it was bulletproof. Ore prices were continually rising because of demand from China and other markets near Asia. But what we’re seeing today is that sometimes prices for things fall too, which we’d never really considered before.”
While market analysts continue to revise their forecasts, Strongman’s 600-strong Pilbara workforce must face the realities of slim employment prospects in an increasingly depressed industry. “When [Director of Operations Ben] Kisso [Kissington] said China couldn’t afford our product anymore, the boys and I had a good belly laugh,” says Day Supervisor Steve Birken. “Then he made us all redundant.”
Some workers have joined with West Australian Premier Colin Barnett in laying the blame at the feet of global mining giants BHP and Rio Tinto, who have been increasing their production of iron ore in what some believe is a deliberate strategy to lower prices and squeeze smaller rivals. Earlier this week Mr. Barnett reminded BHP and Rio that the government owned the ore, prospecting rights and the land and was “not in the business of surrendering them to profit-shifting multinationals, that is unless they threaten to run an ad campaign, which they probably will.”