Arrium has outlined more job losses and warned it could mothball its Whyalla steel plant and mining operations, as the group struggles to cut costs amid plummeting commodities prices.
The South Australia-based miner on Wednesday reported a first half net loss of $235.8 million, driven by impairments in its mining business and restructuring costs.
The loss is much smaller than the $1.49 billion hit recorded a year ago, but chief executive Andrew Roberts said the Whyalla steelworks and the iron ore mining business had together drained $230 million cash during the six-month period.
The company is now hunting for $60 million in further cost cuts at Whyalla, which is Arrium's largest steel plant, and a $10 per tonne reduction in costs at its loss-making iron ore mining business.
"In the event we can't bridge that gap, we are doing work and planning to put the Whyalla steelworks and the mining operations in care and maintenance," he told reporters.
Arrium, formerly known as OneSteel, operates a 1.2 million tonnes a year steel plant at Whyalla on South Australia's Eyre Peninsula, and currently employs 1,100 people.
While its smaller but more modern plants in Melbourne and Sydney continue to be profitable, the Whyalla steelworks have weighed down on the steel business.
The company cut about 900 jobs at Whyalla last year in an effort to stem the cash losses, and said it plans to cut another 400 jobs across the group in the second half of 2015/16 - mostly at the South Australia plant.
South Australia's government on Wednesday said it is negotiating a bailout for the troubled company to prevent further job losses.
Premier Jay Weatherill said he has held talks with Prime Minister Malcolm Turnbull and expects the federal government to partner with SA in shoring up the miner's long-term future, but did not specify the exact nature of any potential assistance.
Arrium's Moly-Cop mining consumables business remained strong in contrast to its other divisions, contributing $109 million of the $115 million total underlying earnings for the half year.
Moly-Cop is the world's largest supplier of grinding media used for crushing and grinding in the mining and construction industries.
Mr Roberts said the proposed sale of Arrium's most profitable business to pare back debt was on hold for now, after recent bids valued the operations far lower than expected.
The company is now discussing other options with its lenders, including bringing in fresh debt or equity.
Arrium said the continuing cash drain had led to its debt pile blowing out to $2.08 billion by December-end, from $1.75 billion six months earlier.
The news rattled investors, with Arrium shares sliding 1.5 cents, or 23.8 per cent, to 4.8 cents.
IMPAIRMENTS DRIVE FIRST HALF LOSS
* Net loss of $235.8m vs $1.49b loss
* Sales revenue down 14.1 pct to $2.76b
* No interim dividend, unchanged.