Melbourne (Platts)--25Jan2013/630 am EST/1130 GMT

Australia's Atlas Iron said Friday it shipped out a record high 1.75 million mt of iron ore over October-December 2012, up from 1.59 million mt in the previous quarter and 1.39 million mt in the year-ago period.

Atlas managing director Ken Brinsden said in a conference call Friday that of the 1.75 million mt that was shipped out in the December 2012 quarter, around 375,000 mt comprised Atlas' lower grade fines.

The iron ore sold by Atlas over October-December had an average grade of 50-57.5% Fe, while the lower-grade fines were around 53% Fe, the company said.

"We're seeing a strong market for this [lower-grade] product and we're taking advantage of excess capacity and shipping to capitalize on this," said Brinsden.

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Atlas used to put the lower-grade ore in a waste dump, but as global production dwindled -- particularly from India which has cut supplies by about 100 million mt in the past year -- and China mining lower grade ore, the company now finds it profitable to sell the lower-grade ore, he said.

"People are trying to lock in product as they expect steel production rates to go higher this year and no new [iron ore] production supply is expected to come on over the next 12 months," Atlas' commercial director Mark Hancock said.

During the December 2012 quarter, Atlas signed three new offtake agreements for a total 2.2 million mt/year with two Chinese steel mills and an international trading house that will start January 1, 2013, Platts reported previously.

The company said Friday that it exported its first cargo to a country other than China in the quarter, and Brinsden told Platts it went to a large global mill in a major Asian market.

Atlas achieved an average price of $106/mt CFR for its standard product during the December 2012 quarter and the company expects the pricing environment to stay strong over the medium to long term, at around $120-140/mt, Brinsden said.

The company said it remains on track to hit production of 10 million mt in the current fiscal year which ends June 2013.

Atlas produces iron ore from its Wodgina and Pardoo mines in the eastern Pilbara region of Western Australia, all of which is exported.

--Marnie Hobson, marnie_hobson@platts.com
--Edited by Deepa Vijiyasingam, deepa_vijiyasingam@platts.com

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