Steel and mining group Arrium is to cut 120 jobs as part of a restructure at its Waratah division.

Arrium said it would reduce its workforce at Waratah’s base in the NSW city of Newcastle by 20 per cent by June 14.

Arrium’s Waratah steelmaking business supplies fencing products to farmers and makes train wheels.

The company said there had been a change in production requirements from the Waratah division, including lower demand for rail wheels.

Arrium expects to save $14 million a year from the restructure, which will cost it $15 million in fiscal 2014.

Details of the job cuts were revealed in a series of presentation slides managing director Andrew Roberts was due to deliver to the Macquarie Australia conference on Thursday.

Arrium said that while its mining consumables business, which includes Waratah, was enjoying strong demand and stable margins in North and South America, its Australian business was under pressure.

Grinding media sales had fallen in Indonesia.

And second half volumes within its rail wheels division were forecast to be down by a quarter compared to the first half and by 45 per cent compared to the same period a year ago.

As a result, the mining consumables business was expected to suffer a $15-$17 million hit to its underlying earnings in the second half.

Elsewhere, Arrium’s steel and recycling business was still enduring weakness in domestic and offshore steel markets.

While it expects to benefit from improvements in the Australian construction market, second half domestic sales were forecast to be flat due to delays on major projects including NSW’s Pacific Highway and Sydney’s Barangaroo.

Sales volumes were expected to lift in 2015, with increased project construction in NSW and Western Australia.

Meanwhile, Arrium mining sales for the March quarter rose 54 per cent to 3.03Mt despite adverse weather.

Sales for the year to the end of March were up 70 per cent to 9.2Mt, with annual sales expected to hit between 12.3Mt and 12.6Mt, ahead of Arrium’s original target of 12Mt.