Arrium is mothballing its higher cost Southern Iron project in South Australia, while Western Australia’s controversial Rosslyn Hill lead mine at Paroo Station is being moved onto care and maintenance, as reported earlier this week.

Arrium announced this morning that 600 workers would be laid off from Southern Iron while operations at its lower-cost Middleback Ranges operation at Whyalla will be optimised as part of a $A1.3 billion writedown in the face of crumbling iron ore prices.

MACA will meet with Arrium as soon as practicable in order to discuss the contractual implications of its decision to mothball operations and to ensure a safe and efficient ramp down.

In the wake of the Arrium decision, MACA lowered its full year revenue guidance for the 2014-15 financial year from more than $650 million to $620 million to reflect the shutdowns, but stressed that work in hand remained strong at $1.4 billion and said it expected a net profit after tax for the 2015 financial year up on its 2014 after tax result of $55.4 million from revenue of $595.4 million.

The Rosslyn Hill lead mine contract was smallest of MACA’s full services continuous mining projects by monthly revenue and capital employed and should have a minimal impact on the firm’s bottom line.

MACA said its strategic decision to diversify its geographical exposure through its entry into South America had enabled it to offset the contractual changes experienced as a result of a softer market domestically and provided increased commodity exposure towards gold.

The loss of two contracts this week was somewhat ameliorated by a new $9 million contract with Doray Minerals in relation to Stage 2 of its Andy Well gold project in WA.

MACA will start works this week which will comprise open pit mining, including drilling and blasting and loading and hauling. The project is expected to last about six months.

Shares in MACA dropped 9% to 88.5c.

In separate news, logistics firm Qube Holdings confirmed it would not be substantially affected by Arrium’s decision to mothball Southern Iron.

Qube said the decision to cease operations would take about three to four months to implement, and it should not have a material impact on its 2014-15 earnings.

Qube’s contract with Arrium provides for demobilisation and redundancy costs to be paid by the miner on early termination of the contract, plus a provision for compensation in relation to Qube’s deployed assets.

The firm said Arrium’s decision was disappointing, but its diversification strategy and contractual arrangements would continue to mitigate similar events.