SYDNEY, June 21 (Reuters) - Australia's Atlas Iron, which narrowly escaped collapse when iron or prices crashed in 2015, has deferred construction of a new mine, citing weak prices for the steelmaking commodity.
Development of the Corunna Downs mine by Australia's fifth biggest producer, costing between A$47-A$53 million ($35-$40 million), was announced in February when iron ore was trading at around $95 a tonne.
Prices have since retreated to under $60 a tonne on concerns about oversupply and weak demand from steelmakers in China, the world's top buyer.
"Corunna Downs remains an important project for the company to sustain its production base and we will proceed with its development when market conditions improve," Atlas Managing Director Cliff Lawrenson said in a statement.
The mine was a key plank in efforts to rebuild the company's yearly production rate to 12 million tonnes, after the firm almost collapsed during a previous down cycle before being rescued by creditors.
Atlas was forced to suspend mining in April 2015 when it was losing $15 for each tonne mined. It faces higher costs than some other Australian producers because it uses road, not rail, to ship ore up to 230 kilometers (140 miles) to port. Within a year, the mines were back running, after 70 percent of Atlas was transferred to creditors in exchange for a 48-percent reduction in debt. Inventories of imported iron ore at Chinese ports last stood at 138.95 million tonnes, according to the latest data tracked by SteelHome. The week before stockpiles hit a record 140.05 million tonnes <SH-TOT-IRONINV>.
Forecasters for Citi expect an iron ore surplus of over 100 million tonnes this year.
The bank has slashed its 2017 average forecast to $61 a tonne from $70, and to $50 from $53 for next year.
In lieu of developing Corunna Downs, Atlas said it would add an additional 2 million tonnes of production capacity from its existing mines for an overall annual rate of 9-10 million tonnes.
($1 = 1.3243 Australian dollars) (Reporting by James Regan; Editing by Joseph Radford)