JOHANNESBURG (miningweekly.com) – To mitigate the fall in the iron-ore price, Aim-listed African Minerals continued to focus on cost saving initiatives, actively managing working capital and capturing more of the available revenue through enhanced product management, the company said in a market update on Wednesday.

African Minerals noted that the Platts 58% iron-ore index, against which its products were priced, had fallen from an average of $104/t in the first quarter of the year to an average of $83/t in quarter two, while the ratio to the benchmark TSI 62% index had widened from a 88% average for the first quarter to as low as 76% in the second.

The company did, however, note that this gap had now started to close again and was currently at 82%, with the Platts 58% index now at $77/t and the TSI 62% index at $95/t.

“Operational cash flow at the project level has deteriorated compared to previous quarters, and remains tight, and the board has put in place appropriate plans to resolve this situation,” African Minerals said, adding that the next two months were expected to deliver a substantial improvement in costs and revenues.

African Minerals said revised contract terms with several key suppliers were currently being implemented, while a continued focus on increasing export volumes would dilute fixed costs.

Further, African Minerals would also commission a new nine-million-tonne-a-year 1G process plant which would allow it to decommission three smaller expensive plants.

Also, desliming circuits would be established, which would decrease moisture levels and freight rates, increase the number of dry tonnes sold, and significantly reduce the company’s rehandling volumes currently associated with stockpiling and drying activities.

Further, African Minerals would also increase the number of vessels that it chartered itself and sold on a cost and freight basis, which would reduce equivalent freight rates compared with free-on-board pricing.

African Minerals also noted that it continued to operate within market guidance.

“Building on the 9.1-million tonnes that was exported in the first half of this year, July production was also on target, with nine Cape-size vessels loaded in the month, and the company remains confident of its performance in August despite now reaching the height of the wet season,” African Minerals said.

The company also stated that it continued to closely monitor the Ebola virus outbreak, adding that it had implemented interventions, principally relating to access control, temperature monitoring, enhanced hygiene, travel restrictions, and community communication and education.

“No cases have been suspected or confirmed at the company's sites, and African Minerals continues to operate normally across the mine, plant, rail, port and marine operations,” the company said.