BHP looking to cut Pilbara contractors

Iron ore operations in the Pilbara are set for a shake up as BHP renew efforts to cut costs by taking moving more service contracts in-house.

The mining giant has reportedly opened negotiations with contractors at Mt Whaleback and other mining operations in the Pilbara in order to retake control of the contract workforce.

The West Australian reported the move would not result in immediate job-losses in the Pilbara.

Macmahon Holdings employs about 500 workers at BHP's Orebody 18 and Wheelarra operations while smaller contractors employ staff across the company’s mining and processing operations at Mt Whaleback, with several hundred employees thought to be likely to be brought in-house.

The move to change its WA iron ore business from contractor mining to owner-operator mining became apparent in 2011 when BHP acquired Leighton Holdings HWE Mining taking 2500 staff and plant and equipment back to its books.

As the mining boom slows and companies continue to reassess their expenditure, it seems they have contractors in their sites.

BHP has made similar moves at its other operations.

Last week BMA advised Downer EDI they intended to absorb a quarter of pre-strip work at the mine, resulting in the mine service companies making 185 positions redundant.

"In response to a challenging market environment, BMA continues its focus on reducing operating costs across its business," the company said in a statement.

"This includes reviewing contractor arrangements and making the necessary adjustments to ensure operations can remain cost competitive."

Earlier this year Xstrata took control of Collinsville Coal mine away from Thiess in a move the company said it hoped would "restore the mine's viability".

While mining giants Peabody and Yancoal announced a joint venture agreement to take control of Middlemount mine away from service contractor NRW.

The cost cutting measures come as the miners attempt to deal with stabilising commodity prices, and increased investor demand for larger returns.

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