Mining and Heavy Industries

Atlas to scope out options for more exports

Atlas has worked out better deals with its contractors. Photo: James Lauritz.

Atlas Iron managing director Cliff Lawrenson says the miner needs to add low-cost capacity to tackle the potential of rising costs in the next financial year, as the company announced healthy revenue and profit improvements in FY17.

Atlas this week announced an 11% increase in revenue in FY17 to $871 million.

After a $159 million loss in FY16, Atlas climbed back to a $48 million net profit after tax in FY17.

The miner reported C1 cash costs of A$34-$36 per wet metric tonne FOB in FY17, but is forecasting a rise to A$37-39 in FY18.

“The expected increase in operating costs is driven by longer road haulage distances, higher sea freight rates and reduced export volumes when compared to FY17,” the company told the ASX.

Atlas is only forecasting just 9-10 million tonnes shipped in FY18, after it exported 14.4 million tonnes in FY17, and managing director Cliff Lawrenson is reportedly keen to push more tonnes through the Utah Point export site, where Atlas has a capacity of around 13 million tonnes per annum.

“The value driver in this company is the infrastructure corridor that we have through Utah Point and it is all about keeping that corridor at capacity,” Lawrenson was quoted as saying by the AFR.

“What we are focusing on now is filling that infrastructure corridor …

“We have lithium opportunities with Pilbara Minerals and others, and we have identified some smaller [iron ore] deposits within our tenements which are not projects in their own right but they are what we call here ‘stocking fillers’ – so a couple of million tonnes.”

Lawrenson added in the annual report statement: “Atlas, once again, has the capacity to generate strong cash flow and profit despite iron ore price volatility. The key to this is maintaining our agile business model, with a focus on tight cost discipline and a prudent level of hedging.

“The Company’s underlying financial position has been transformed, with our loan reduced by $79m in FY17. We are focussed on continued debt reduction and balance sheet improvement.”

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