Struggling Arrium flags more Whyalla cuts
Struggling steel and mining group Arrium says it is shortlisting parties to undertake due diligence for its mining consumables business, and has embarked on a fresh round of cost cuts.
The troubled company announced a strategic review in August in an effort to reduce debt, after being hit hard by the plunge in iron ore and steel prices.
Today, it told the stock exchange it was looking for more than $100 million in cost savings at its Whyalla steelworks, without giving any clue about additional job losses.
Earlier this year, Arrium announced the loss of 580 jobs in its South Australian operations.
The SA-based mining and materials group posted a full year loss of $1.9 billion after being forced to take asset impairments and restructuring costs in its 2014/15 accounts.
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On Thursday, Arrium said it had received strong interest for its Moly-Cop business, and is also continuing to consider other options as it looks to reduce its debt pile.
The company is estimated to hold debt of around $1.7 billion.
Its Moly-Cop mining consumables business is the world’s largest supplier of grinding media, which is used for crushing and grinding in the mining and construction industries.
Arrium, formerly known as OneSteel, acquired the Moly-Cop and AltaSteel businesses, which now make up its mining consumables unit, in 2010 for $932 million.
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The company also announced it is working to cut $100 million a year in costs at its Whyalla Steelworks in South Australia, within two years.
Arrium said it has been engaging with employees, unions and suppliers at the unit, as well as the local and federal governments regarding the challenging external environment.
These cuts are in addition to the overall cost reduction target of $60 million that it announced in August. An update on cost reduction targets and progress will be provided in November, it said.
Earlier this week, the company said it was working with the South Australian government to find ways to expand its wholly-owned Whyalla port and to throw open the facilities to outside users.
Arrium reiterated that it continues to be in compliance with its banking covenants, and that the next significant maturity of debt will fall due in the 2018 financial year.
At 11.45 AEST, Arrium shares were up 1.00 cent at 8.8 cents.
– with AAP
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