Hefty production cuts and a lower Australian dollar have helped struggling steel and mining group Arrium slash costs in the September quarter, outpacing declining prices.
The company reported a 20 per cent decline in iron ore shipments from the June quarter, after mothballing production at its high-cost Southern Iron operations earlier this year.
Shipments in the three months to September fell to 2.2 million tonnes.
Arrium said the average price it received for its ore was down $US4.00 to $US48.00 per tonne.
However, in local currency terms, the price slipped by just $A1.00 to $A66.00 per dry metric tonne.
Australian miners have benefited from a nearly 12 per cent fall in the Australian dollar this year, offsetting some of the pain from lower US-dollar denominated commodities prices.
"Pricing was less volatile than in recent periods due to improvement in the supply/demand balance. This was supported by continued low port stocks in China which fell below 80Mt," Arrium said on Monday.
The debt laden company has been racing to slash costs from its loss-making iron ore operations, and said it had brought down total cash costs by nearly $A5 to $A57.40 per tonne during the quarter.
Arrium said it made significant progress in re-setting its cost base towards achieving its target cash breakeven price of $US47 a tonne for this financial year.
Its shares shot up on the news, closing up 1.5 cents, or 14.29 per cent to 12 cents.
The stock is however, down more than two thirds over the last 12 months.
Earlier this month, Arrium announced it would cut $100 million a year in costs at its Whyalla Steelworks in South Australia. The cuts are in addition to the overall reduction target of $60 million announced in August.
It had also announced plans to sell its profitable Moly-Cop mining consumables business, the world's largest supplier of grinding media used for crushing and grinding in the mining and construction industries.
The sale will help pare back its debt pile of an estimated $1.7 billion.
Arrium made a full year loss of $1.9 billion after being forced to take asset impairments and restructuring costs in its 2014/15 accounts.
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