Junior iron ore miner BC Iron will shutter its key Nullagine mine and cut jobs due to falling iron ore prices.
Perth-based BC Iron will suspend production at its Nullagine joint venture operations in December and January as the steel-making commodity trades at a 10-year low of $US38.50 amid weak steel demand in China.
BC Iron shares fell sharply on the news, losing 4.5 cents, or 23.7 per cent, to 14.5 cents after coming out of a trading halt on Friday.
Around 30 BC Iron employees and 200 contractors work at the Nullagine operations and BC Iron has around 30 employees at its head office in West Perth.
Managing director Morgan Ball said it had been a difficult decision to suspend operations but no final decision had been made about job losses.
"We've alluded to the fact that there will be an impact to staff but we have to work that through in a measured manner," Mr Ball told AAP.
He said affected staff would be spoken to individually once a decision had been made.
"It's really bitter sweet because I've invested my heart and soul in the last six years into building up this asset and building up this company but I'm very comfortable that the decision the board and I have made is the correct decision," Mr Ball said.
Continued iron ore price falls, particularly over the past two weeks, had forced the company to act, he said.
BC Iron has been bleeding cash in recent weeks, revealing that it expects to have a net cash position of $42 to $47 million on December 31, 2015 compared to $71.8 million on September 30.
"The BC Iron board believes it is not in the interests of the company's shareholders for the NJV to continue to operate in its current form," the company said in a statement.
The Nullagine mine is 75 per cent owned by BC Iron and 25 per cent owned by Fortescue Metals Group.
The company is reviewing its full year 2016 guidance on the Nullagine joint venture pending a decision on an ongoing low grade operation, which would also have a bearing on the impact of job losses.
BC Iron recently signed a three-month deal with Fortescue to link its rail and port tariff to iron ore prices to lower the company's break-even price.
The company said the six million tonne operations would be recommenced if BC Iron and Fortescue decided there had been an appropriate change in market conditions.
A Fortescue Metals Group spokesperson said current market conditions had heavily impacted smaller producers like BC Iron.
"It is disappointing that the successful Nullagine Joint Venture will be put on hold pending an improvement in the outlook," the spokesman said.
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