The fallout from the move by Atlas Iron (AGO) to start mothballing its WA iron ore mining and export operation, had a mixed nature about it yesterday.
Transport group McAleese (MCS) went into a trading halt to allow it to review the financial impact of Atlas’ decision.
McAleese carries iron ore from all of Atlas’s iron ore mines to the Utah Point port operation at Port Hedland (where Qube does the stevedoring) had expected to generate about 40% of its expected 2014-15 earnings before interest taxation deprecation and amortisation (EBITDA) from Atlas.
McAleese said yesterday it had sought a voluntary suspension of its stock on the Australian Securities Exchange for up to 10 days while it reviews "the operational and financial implications, and various commercial scenarios that could eventuate, as a result of Atlas’ decision”.
"In light of the company’s material exposure to Atlas, a voluntary suspension is considered appropriate to ensure the market in McAleese securities is orderly and trading on a fully informed basis," the company said.
“McAleese Group has a strong and long-standing partnership with Atlas and will continue to work constructively with the Pilbara based miner as a priority to achieve outcomes in the interest of the company’s people and business."
The shares were trading at 16c when suspended.
MCS 1Y – McAleese shares suspended as Atlas fallout begins
Meanwhile Qube (QUB) told the ASX yesterday that the suspension was not expected to have a material financial impact on the logistics group’s underlying earnings in the current financial year.
"Qube’s diversification strategy by customer and product continues to mitigate Qube’s risks against such developments," the company said.
"No customer, including Atlas Iron, represents more than 5 percent of Qube’s revenues."
Qube handled about 16 million tonnes of iron ore out of Utah Point in the financial year to date, with Atlas accounting for about 64% of that figure.
Qube shares rose 1.7% to $2.85.
The indefinite suspension of Atlas’s mines is likely to force some contractors to make layoffs because there is limited contracting work available on other mining projects. BGC is understood to have about 200 employees working on the Mt Webber and Wodgina mines.
MACA (MLD) shares rose 3.7% to 84c despite its shares falling to a day’s low of 77c. MACA said its cancelled contract with Atlas generated about $4-5 million a month and cut its revenue estimate to about $600 million from $620 million.
The global price of iron ore was up more than 3% on Monday night after the supposedly weak trade data from China saw a sell-off in Australia and other markets overnight.
The sell down yesterday afternoon in the wake of the trade report from China, saw shares in Fortescue Metals Group (FMG) drop to a new six-year close of $1.775 yesterday. Australian iron ore (the global standard) traded at $US48.80 a tonne, up 3.2% from its prior close of $US47.30 a tonne on Friday night, and well above of the 10-year low of $US46.70 reached a week ago.
Treasurer Joe Hockey warned yesterday the 2015-16 Federal budget may factor in an iron ore price of $US35 a tonne for the coming year, a number well short of the government’s previous forecast of $US60 a tonne.
Our market will start in the red this morning, thanks to weak performances in markets in Europe and the US. Gold fell, oil edged higher.
