Glencore Xstrata to Pull Plug on Australian Iron Ore Operations

Reuters reported that as a result of “deteriorating market conditions,” Glencore Xstrata plc (LSE:GLEN) will stop producing iron ore in Australia in August. The mining giant had been trying to break into the sector for two years.

As quoted in the market news:

The company has been producing 1 million tonnes of iron ore concentrate a year for Asian customers as a by-product from its Ernest Henry copper mine in north eastern Australia since mid-2011. Glencore’s iron ore output is very small compared to that of Anglo-Australian miners Rio Tinto and BHP Billiton .

‘The business case, which made magnetite production a positive contribution to Ernest Henry’s operations, is not supported in the current market,’ an Ernest Henry Mining spokeswoman said. Magnetite is a form of iron ore.

‘Falling revenue, increasing production costs and ongoing high logistics costs in getting our product from mine to market have eroded the margins in this business,’ the spokeswoman said.

Click here to read the full Reuters report.