CANBERRA: Australian mining company Atlas Iron expects to record an impairment charge of roughly $130 million to $160m this fiscal year, after a further deterioration in the outlook for iron-ore prices prompted the miner to write down the value of its projects.
Atlas has been grappling with a sustained decline in iron-ore prices over the past year, underpinned by a large increase in supplies from new and expanded mines in Australia and overseas, which has outpaced demand from steelmakers.
The commodity’s value is down 13 per cent year-to-date and market analysts have been lowering their price forecasts for coming years, citing a sustained oversupply of the raw material. Earlier Wednesday, Citi cut its long-run projection for the commodity to $US55 a metric ton from an earlier estimate of $US81 a ton.
The downturn led the miner in April to announce it was shuttering its three mines and halting exports to Asia, although management later reversed this decision after finding ways to cut production costs.
In a regulatory filing Wednesday, Atlas said the non-cash impairment charge related to writedowns on its undeveloped iron-ore deposits, such as the McPhee Creek site in Western Australia, rather than its existing operating mines. Atlas assured shareholders it still has “significant headroom” on its debt covenants.
