Atlas Iron (ASX:AGO) announced last Friday that it would shutdown all its Pilbara mines amid falling iron ore prices. The decision to close these mines has sent reverberations throughout the mining industry. The decision will directly lead to the loss of more than 500 jobs. US-based investors of Atlas have pressured the company to cauterise its bleeding financial position. The company’s current cash reserves of $US130m is less than half of the $US275m in debt that is due at the end of 2017. The mining company cited the sub $US50 per tonne iron ore prices as the reason for the closing of the Mt Webber project. It also said the worst effects of the shutdown would happen four of five weeks after the announcement.
Port Hedland Chamber of Commerce managing secretary Arnold Carter noted that the mining sector would not be the only industry affected. "It's not only the company itself, it's all the way down the line; it's the subcontractors who participate in the organisation of getting the iron ore not only mined, but transported," he said. The early closing of the mine will affect other companies such as McAleese and Mineral Resources as well. The transportation company McAleese, which relies on Atlas for 40 per cent of its business, has issued a “voluntary suspension” of its shares. The company considered the suspension “appropriate to ensure the market in McAleese securities is orderly and trading on a fully informed basis.”
Shares of Atlas have been suspended from trading on Friday. AGO is down 88.12 per cent in the last 12 months and has fallen 27.27 per cent so far this year.