BC Iron expects to save about $2.3 million over three months after Fortescue agreed to set the rail and port tariff for the companies' Nullagine joint venture in accordance with varying iron ore prices.
BC Iron, which is trying to cut production costs after losing $158 million in 2014/15 on falling iron ore prices, says the new tariff will kick in from November 1.
The Pilbara-based Nullagine mine is 75 per cent owned by BC Iron and 25 per cent owned by Fortescue. The Nullagine Joint Venture (NJV) pays to transport ore to Port Hedland using infrastructure owned by Fortescue subsidiary, The Pilbara Infrastructure.
"The variation to rail and port charges will have the effect of lowering the iron ore price at which BC Iron can continue to generate positive cash flows from the NJV," BC Iron managing director Morgan Ball said.
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