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MELBOURNE, Feb 19 AAP

February 19 2013, 12:29AM

Steel and mining group Arrium has flagged further job losses after its writedowns of its struggling steel division pushed it further into the red.

The company blamed a high Australian dollar, low steel prices and weak construction markets for the massive $474 million impairment on its assets, which was announced to the market earlier in February.

Arrium made a net loss of $447.2 million in the six months to December 31, down from a $70.7 million loss in the previous corresponding period.

Arrium shares were 2.5 cents, or 1.98 per cent, weaker at $1.235 at 1220 AEDT.

"If you look back, we have had significant transformation of our steel manufacturing and distribution businesses and taken out a little bit over 2000 people out of those businesses from where we were at three-four years ago," chief executive Geoff Plummer said in a teleconference.

"The nature of those businesses is such that we have to keep making them sharper and more cost efficient and there has got to be continuing improvement in those businesses in terms of cost base and operating performance.

"Unfortunately labour reductions will continue."

Mr Plummer did not say how many jobs would be shed.

The steel manufacturing segment posted a $27 million loss at the earnings before interest and tax level on revenue of $1.157 billion.

It employees 3,006 people.

"For the OneSteel steel businesses, we expect continuation of the difficult external environment, including a high Australian dollar and generally weak domestic demand," the company said.

Arrium's underlying profit in the six months to December was $51 million, down from $77 million in the previous corresponding period.

Lower iron ore prices in Arrium's mining business was the main factor in the lower underlying profit, the company said on Tuesday.

No specific guidance was given for the full year, but Arrium said it expected the majority of its full year net profit to be made in the second half as iron ore prices improve.

Lower iron ore prices had a $75 million to $85 million impact on net profit in the mining business, compared to the previous corresponding period, Mr Plummer said.

"While further volatility is possible, we anticipate iron ore prices for the balance of this financial year to continue to be above the average level for the first half," the company said in a statement.

The star performer was its rapidly growing mining consumable business, which supplies equipment to resource companies.

It posted earnings growth in the six months to December, as it grew in Australia as well as in North and South America.

An unfranked interim dividend of two cents per share will be paid to shareholders.