Mining contractor Maca has suffered another blow to its order book, with Sinosteel Midwest Corporation announcing plans to halt operations at its Blue Hills hematite project in the Mid West after failing to gain environmental approval for an expansion.
Sinosteel said it would suspend mining operations at Blue Hills in May and, as a result, would be ending Maca’s contract to provide mining and crushing services.
Maca said the work generated about $3.5 million in revenue per month.
Sinosteel said operations and corporate staff would likely be progressively made redundant in line with operational requirements.
A spokesperson from Sinosteel confirmed that 110 contractors employed on the site would be made redundant, along with 10 Sinosteel corporate roles.
General manager Phil Allsopp said it was with great disappointment that the organisation had to make the decision, but moved to dismiss the current weak iron ore price as the sole factor behind the company’s decision.
The company also said lengthy delays in obtaining environmental approvals for extensions to the Blue Hills operation left no alternatives available.
Mr Allsopp said he had hoped the Environmental Protection Authority would have approved the company’s proposal to extend the project, which would have added at least another two to three years of production.
“However, it has become clear that this approval will not be timely,” he said.
As a result of the decision, Maca said its work in hand position would be reduced by about $30 million, while its revenue guidance for the 2015 financial year would be unchanged at $600 million.
Blue Hills suffered setbacks in 2012, when Sinosteel made the decision to delay the project’s start-up due to uncertainty in the iron ore market.
But Sinosteel reversed its decision in February 2013 and announced it would resume mining at Blue Hills, and hired Maca two months later to provide mining and crushing services.
Maca’s contract loss follows news that it would suffer a hit to its revenue, after Atlas Iron announced it would be halting production at its Abydos, Wodgina and Mr Webber iron ore projects in the Pilbara.
Maca shares were down 1.7 per cent to 82.5 cents per share at 1:45pm.
