(Bloomberg) — Sphere Minerals Ltd., controlled by Glencore Plc, took a $192.5 million writedown on its Askaf iron ore project in Africa, saying plunging prices made it unprofitable to develop.
Work on the $900 million project was slowed in October, after development was approved in April last year. Askaf North had been expected to begin output in early 2017 and was forecast to yield about 7.5 million metric tons a year, once developed.
“The board has determined to defer further development of Askaf,” Sphere said Wednesday in a statement. “All construction commitments are being closed out, expenditure minimized, and employment numbers reduced.”
Iron ore has continued its slide since Sphere’s October announcement. Benchmark prices in China Tuesday dropped to the lowest since at least May 2008, when Metal Bulletin Ltd. started compiling weekly prices, as the largest producers including Vale SA and Rio Tinto Group increase low-cost output from Australia and Brazil.
The global surplus will surge to 437 million tons in 2018 from 184 million tons this year, Morgan Stanley said on Feb. 22.
Total impairments at Sphere last year were $240.7 million, with the company also writing down exploration spending at the El Aouj and Lebtheinia projects, the company said in the statement.
Sphere is 88 percent owned by Baar, Switzerland-based Glencore’s Sidero Pty, according to data compiled by Bloomberg.
Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director of Glencore.
