Arrium will investigate selling its iron ore and steel businesses to try and fix its balance sheet as the debt-laden group announced new impairments that take this year's total to $1.6 billion.
The South Australian mining and materials group is a victim of the plunge in iron ore prices from comfortably above $US100 a tonne in recent years to below $US50 in April.
Arrium now faces posting a massive full year loss after announcing on Monday a $320 million impairment hit on top of the $1.3 billion already announced in January.
Its net loss for the first half was $1.5 billion with no dividend and its net debt is a large $1.75 billion to $1.85 billion.
The company announced a strategic review on Monday in which chief executive Andrew Roberts would not rule out selling any major assets.
No decisions had been made yet, but the fact that the iron ore and steel making businesses are not currently profitable might mean asset sales are necessary to cut debt.
"The potential divestment of assets or businesses may be required to significantly take a step change in that (debt)," Mr Roberts told AAP.
"Whilst Arrium is in a challenging position around its level of debt it does have options and we'll work through those options to determine the best way forward."
Fund manager Allan Gray recommended Arrium get out of iron ore mining in April.
Arrium has had problems since the global financial crisis related to its OneSteel steelmaking business, but has been previously praised for diversifying into iron ore mining when prices were much higher.
Now iron ore is a major problem, this year leading to nearly 600 job losses with more expected, the bulk of its $1.6 billion in impairments the decision to close one of its two iron ore projects - Southern Iron.
Mr Roberts said he was still positive about the mining business, saying Arrium had cut its costs 25 per cent in the last two years and was targeting a lower iron ore breakeven price of $US50 a tonne for next year.
However he acknowledged that iron ore prices were still tipped to fall, despite the recent recovery to above $US60 a tonne.
He was more bullish about steel, citing a lower Australian dollar, higher volumes, lower scrap prices and lower costs.
Earnings in the second half will be stronger in the steel segment and profitable mining consumables division.
However Arrium has failed to achieve the stronger overall second half earnings Mr Roberts predicted back in February, due to the iron ore price.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the year to June 30 are tipped to be $335-$350 million, following $189 million in the first half.
IG market strategist Evan Lucas said the company appeared to be putting all options on the table to deal with its huge debt and the bad news didn't appear over.
Arrium's shares were down 0.75 cent to 15.25 cents at 1545 AEST, having plunged 80 per cent in the last year.
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