Almost 600 jobs to go in SA mine closure

The South Australian government says it is disappointed by Arrium's decision to close a mine in the state, resulting in the loss of almost 600 jobs.

The company announced on Friday it would close one of its two SA mines due to falling iron ore prices.

The mothballing of its Southern Iron mining operations will mean 200 of its workers and about 380 contractors will go.

The company, formerly known as OneSteel, will keep its lower-cost Middleback Ranges operations open.

Resources and Energy Minister Tom Koutsantonis said his thoughts were with the affected workers, contractors and their families.

"I have spoken directly with Arrium Mining's chief executive and expressed my disappointment with the decision," he said.

"Arrium has indicated it will honour all employee entitlements and look at opportunities for deployment of affected workers, where possible."

He said the state development department would provide assistance to affected workers.

The Retrenched Worker Program provides six months of assistance to train for alternative employment.

Arrium has also raised the prospect of more than $1.3 billion in writedowns.

Iron ore prices have more than halved in the past 12 months to due weaker demand from China and overproduction.