By Melanie Burton
MELBOURNE (Reuters) – Australian junior miner Venture Minerals has temporarily suspended operations at its controversial Riley iron ore mine in northwestern Tasmania after just a single shipment, it said on Friday, hit by a plunge in prices.
Its site in Australia’s south-west island wilderness had angered green activists who have held numerous protests since March. The Bob Brown Foundation has called for the World Heritage Listing of the region.
According to a filing, the company said that it is conducting a thorough review of the mine due to falling market conditions and higher shipping costs than anticipated.
The company is aware that some pressures could be temporary but it stated, “Venture believe the best course to take to safeguard the reserve base” by temporarily suspending mining operations.
The company plans to keep employees employed until the market conditions improve to make sure that it can resume operations as soon as possible.
Australia is the biggest global supplier of ironore. About half of its worldwide supply comes from Australia’s Pilbara Region in western Australia. This region was developed by Rio Tinto, NYSE:.
Venture Minerals bought the mine in May. Iron ore prices rose to $220 per tonne by mid-May. This was due to supply problems in Brazil and the shipping delays caused by the COVID-19 pandemic.
The easing of demand by Chinese steelmakers as well as stricter environmental control orders from Beijing have resulted in prices falling half off.
UBS, an investment bank, said that iron ore would average $89 per tonne in the next year and gave Rio a Sell rating.
Venture Minerals claimed that every shipment is bringing in less money than the benchmark 62% price in its 2019 study. Also, Venture Minerals has increased the 30% discount on 57% iron ore from 10% to 30%.
It said that shipping costs have increased from $18 to $54 due to congestion in Chinese ports and coronavirus limitations.
The miner estimated that the project would run for at least two years. This will allow the production of 800,000 tonnes ore per annum, create over 100 jobs, and bring in about A$100m to the state’s economic economy.
Venture Minerals launched a study for the development of a tinmine at Mt Lindsay in the Meredith Range Regional Reserve. This area is considered a precious rainforest by conservationists.
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