The iron ore price plunge is threatening to claim its next, and largest, Australian victim.
The Karara magnetite project in Western Australia is teetering on the verge of collapse as its majority owner, Chinese state-owned steel producer Ansteel, considers pulling funding for the $3 billion project, blaming the iron ore price's spectacular collapse to just over $US41 a tonne.
Shares in Australian minority owner, Gindalbie Metals, were obliterated on Tuesday after it confirmed Ansteel was reviewing "potential options" for the joint venture, adding a withdrawal of funding "could cast doubt on Gindalbie's ability to continue as a going concern". Ansteel is also Gindalbie's largest shareholder, with a 36 per cent stake.
It presents a fairly bleak situation for the beleaguered Karara mine, located about 200 kilometres east of the town of Geraldton, which needs to dramatically reduce costs to remain viable.
If a closure does occur it would put close to 1000 jobs in the firing line, making it the largest victim of the iron ore sector's downturn.
The impending storm in the sector seems to have convinced Independent Senator Nick Xenophon now is the right time to make a renewed push for a senate inquiry to shed light on the forces behind the price slide. That, or it is a clever publicity stunt to promote his West Australian candidate for the next federal election, Luke Bolton.
It is hard to begrudge him the latter, but even if his aim is pure, there will be plenty of blocks on the road to getting an inquiry off the ground. It begs the question, why bother?
Simple. For politicians, especially those in WA, the economic impact of more failures is a huge issue.
Source:AFR