100 jobs go as BHP cuts costs

BHP Billiton has cut about 100 jobs at the Perth headquarters of its iron ore division.

BHP Billiton has cut about 100 jobs at the Perth headquarters of its iron ore division, in the latest move by a mining company to rein in costs as commodity prices stay low.

Further lay-offs are likely at BHP’s Mount Whaleback mine in the Pilbara, a remote region of Western Australia that accounts for roughly two in every five tonnes of iron ore traded by sea.

Mining profits have been squeezed by everything from high wage costs in Australia to China’s cooling economy driving down prices of commodities such as iron ore. The scale of the downturn has prompted BHP and rivals including Rio Tinto to close mines, sell assets and lay off staff.

Last month, BHP flagged possible job cuts at its alumina operation in WA following the completion of a major expansion. Separately, it confirmed it was considering selling its Nickel West business, also located in WA.

“BHP Billiton Iron Ore has, for some time, been committed to its stated productivity agenda,” a BHP spokeswoman said yesterday. “We are focused on delivering value by safely and sustainably growing volumes while reducing costs. In situations where employees are impacted we will undertake every effort to assist them throughout the process and to seek redeployment opportunities where possible.”

BHP chief executive Andrew Mackenzie outlined plans to run its existing businesses more efficiently last year, in a shift away from acquisitions and investments as the primary drivers of profits. Iron ore mining generates the majority of the company’s earnings.

Iron ore prices rose 0.4 per cent to $US92.50 a tonne yesterday, but remain close to two-year lows. Analysts are divided over the outlook for the commodity, which is used to make steel.

UBS expects iron ore prices to stay between $US90 and $US110 a tonne this year, partly because new supply from mines in the Pilbara will continue to outpace demand. However, the Commonwealth Bank said current spot prices were “unsustainably low,” and were likely to rebound in the second half of 2014.

Dow Jones Newswires