Interviewer view · keep this screen to yourself

Standard: Mirrabeena Iron: keep a small iron ore mine running?

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

Mirrabeena Iron runs a small iron ore mine in Western Australia. The iron ore price has fallen, and the board asks whether it should keep the mine running or close it until prices recover. How would you approach this?

Format note: Difficulty: Standard. Format: candidate-led, with interviewer dialogue. Industry: Mining. Region: Australia (Western Australia). Interview length: about 30 minutes. The company is fictional and all figures are illustrative. Iron ore is usually priced in US dollars. All figures here are converted to Australian dollars (AUD), per tonne or per year.

2. Answers to clarifying questions

Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.

If asked: How much does the mine produce, and at what cost?
Answer: About 10 million tonnes a year. Cash cost for mining, processing, rail, and port is about AUD 85 per tonne, plus about AUD 10 per tonne of sustaining capital to keep equipment running.
If asked: What price does it get, and what else is paid?
Answer: About AUD 110 per tonne on current forecasts, down from AUD 130. The state takes a royalty of 7.5 percent of the price (illustrative).
If asked: What would closing cost?
Answer: Keeping the mine safe while it is closed, called care and maintenance, costs about AUD 40 million a year, and restarting later costs about AUD 60 million. The rail and port contracts are take-or-pay: AUD 30 million a year is owed even if no ore is shipped.

3. The hypothesis a strong candidate states

Listen for an early, testable guess like this one. It does not need to match word for word.

At AUD 110 the mine probably still makes some cash. My hypothesis is that it should keep running, because closing has its own costs, but that a longer price fall would force it to cut costs.

4. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Keep running or close: compare the cash from each option
- Key: Cash margin per tonne: price, royalty, cash cost, sustaining capital
- Break-even price
- Cost of closing: care and maintenance, take-or-pay contracts, restart
- How long prices stay low

5. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Royalty per tonne
What a strong candidate does: Candidate: "At AUD 110, the 7.5 percent royalty is:"
Royalty (AUD per tonne): 110 × 0.075 = 8.25
Step 2: Cash margin per tonne
What a strong candidate does: Candidate: "Price minus royalty, cash cost, and sustaining capital."
Cash margin (AUD per tonne): 110 - 110 × 0.075 - 85 - 10 = 6.75
Step 3: Yearly cash flow
What a strong candidate does: Candidate: "On 10 million tonnes, in AUD million:"
Yearly cash flow (AUD million): 10 × (110 - 110 × 0.075 - 85 - 10) = 67.5
Step 4: Break-even price
What a strong candidate does: Candidate: "The mine covers its costs when the price after royalty equals the AUD 95 of cash cost and sustaining capital."
Break-even price (AUD per tonne): (85 + 10) ÷ (1 - 0.075) = 103
Step 5: Curveball: two years at AUD 95
What a strong candidate does: Interviewer: "Analysts now expect AUD 95 per tonne for the next two years." Candidate: "Then each year the mine loses, in AUD million:"
Yearly cash flow at AUD 95 (AUD million): 10 × (95 - 95 × 0.075 - 85 - 10) = -71.25
Step 6: Two years of running at a loss
What a strong candidate does: Candidate: "Over the two years, running costs us:"
Cash over two years if running (AUD million): 2 × 10 × (95 - 95 × 0.075 - 85 - 10) = -142
Step 7: Two years of closing
What a strong candidate does: Candidate: "Closing is not free: two years of care and maintenance and take-or-pay payments, plus the restart."
Cost of closing for two years (AUD million): 2 × (40 + 30) + 60 = 200
Step 8: Cost cut that restores break-even
What a strong candidate does: Candidate: "To break even at AUD 95, costs must fall by about AUD 7 per tonne, which is this share of the AUD 85 cash cost:"
Cash cost cut needed (%): (85 + 10 - 95 × (1 - 0.075)) ÷ 85 × 100 = 8.38

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Keep the mine running and start a cost program now. First, at AUD 110 per tonne the mine still earns about AUD 7 per tonne, or about AUD 68 million a year, because its break-even price is about AUD 103. Second, even if the price falls to AUD 95 for two years, running loses about AUD 143 million over that time, while closing costs about AUD 200 million, because the take-or-pay rail and port contracts must be paid anyway and restarting is expensive. Third, cutting cash cost by about 8 percent would bring the break-even price down to about AUD 95, so the mine would not lose cash even in the downturn. Look first at contractor rates, fuel use, and the mine plan, for example mining lower-cost areas first.

Risks a strong answer names: Prices could stay low for longer than two years; Cost cuts that delay maintenance can cause breakdowns later.

Next steps: Build a cost curve for each part of the mine; Ask whether the rail and port contracts can be reduced or shared with a neighbor.

Strong versus weak

A strong answer

Worked out the break-even price, then compared running and closing on cash, including the costs that do not stop when the mine stops.

A weak answer

Said "close the mine because the price is falling," without counting the take-or-pay contracts or the restart cost.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.