Mount Gibson Iron Cuts Jobs, Mining To Curb Costs

   By Robb M. Stewart 
 

MELBOURNE--Mount Gibson Iron Ltd. (MGX.AU) said Thursday it will lay off about 270 workers, slow mining and cut pay for senior managers to curb costs and help it ride out a fall in commodity prices.

"The immediate market outlook remains uncertain," Chief Executive Jim Beyer said Thursday in a statement to the Australian stock exchange. "The only prudent course of action is to implement comprehensive measures that control costs and enable our operations to remain cash positive."

The company said it is targeting savings of between 120 million Australian dollars (US$124.5 million) and A$150 million, mainly by cutting back mining and working through current stock piles of iron ore.

Mount Gibson maintained its sales target of between 8 million and 8.5 million tons in the financial year to June.

Iron ore prices fell to their lowest level in nearly three years in September as Chinese steel mills ran down inventories, but have recovered some of the decline in recent weeks.

Mount Gibson said its shipments of iron ore rose by 52% in the three months ended September from the previous quarter to 1.76 million tons. But the amount of iron ore it mined during the quarter fell to 1.64 million from 2.2 million tons in the prior quarter.

Mount Gibson's shares rallied on the news, and were trading 13% higher at A$0.75 at 0001 GMT against a broader market trading up 1.1%.

Write to Robb M. Stewart at [e-mail]

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