BHP Billiton cuts 100 iron ore jobs

BHP Billiton has cut 100 jobs from its iron ore headquarters in Perth as the company continues to focus on cost and productivity gains amidst feeble commodity prices.

A number of the affected workers were said to be working on projects that have wound down.

A spokeswoman said BHP reviews aspects of its iron or business regularly to ensure it is operating efficiently.

“BHP Billiton Iron Ore has, for some time, been committed to its stated productivity agenda,” the spokeswoman said.

“We are focused on delivering value by safely and sustainably growing volumes whilst 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.”

The Australian reports further cuts are expected to be made at BHP’s Mt Whaleback mine in the Pilbara.

The last time hundreds of iron ore jobs were lost in Western Australia was in 2012 when the iron ore price was tracking similarly low to its current levels.

The spot price for the metal has fallen to $US92 a tonne this week, marking a 31 per cent decrease since the start of the year.

But it’s not just in its iron ore business that BHP is eyeing gains.

Its coal and aluminium arms have also seen cuts aimed at improving the books, while its Nickel West business is for sale as the company looks to offload unwanted assets.

Lower commodity prices play a part but the tough decisions follow on from rising operating costs, falling labour productivity issues and a high Australian dollar.

Taking over as boss of BHP last May, Andrew Mackenzie wasted no time in announcing new austerity measures.

Since then the company has sold several of its assets including its West Musgrave nickel project and diamond projects overseas.

At a mining conference in earlier this year, Mackenzie said capital expenditure had been reduced by 25 per cent with spending to decline again in the 2015 financial year.

He said BHP had embedded $US4.9bn of sustainable productivity gains which will increase to $US5.5 billion by the end of this financial year.

“In the first half of the 2014 financial year, average truck utilisation, compared with last year, improved by 8 per cent. The average utilisation of our diggers increased by 10 per cent, and we have reset the performance benchmark higher so a clear opportunity remains across the group.

“By doing what we said we would do in the first half of the year, we increased free cash flow by $US7.8 billion and underlying return on capital to 22 per cent,” Mackenzie said.

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