Sydney, 11 August (Argus) — Australian iron ore producer Gindalbie Metals has written down the value of its interest in the 8mn t/yr Karara iron ore mine in Western Australia (WA) by A$640mn ($595mn) because of lower than forecast production levels, lower than forecast iron ore prices and a higher Australian dollar.
Karara shipped 3.39mn t of iron ore magnetite and 4.96mn t of direct shipping ore hematite in the 12 months to 30 June 2014. Gindalbie owns 47.84pc of Karara and Chinese steel producer Ansteel the remainder. The magnetite produced during 2013-14 was at an average grade of 65.4pc Fe, which is below its 68pc target. Karara is 200km east of the WA port of Geraldton, where iron ore shipments are exported.
Gindalbie had valued its share of the Karara joint venture at A$550mn in its half-year results. It gave no guidance on production costs on a per tonne basis.
Gindalbie is suffering from a lower iron ore price because of the massive expansion in Australian iron ore production by the three biggest producers Rio Tinto, BHP Billiton and Fortescue Metals. Rio Tinto last week said that it had no plans to cut production, suggesting that smaller producers with higher costs should cut back their output.
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