Massive cuts across the contract mining sector have come home to roost as drilling service and manufacturing company Boart Longyear slashes over 1000 jobs from its operations globally this year.
Chief executive Richard O'Brien yesterday warned investors at the company's annual meeting that the company expects a sharp drop in profits, which have already been repeatedly revised down as industry sentiment continues to decline.
"The downturn in capital and exploration spending in the mining sector globally has clearly reduced the demand for drilling services and products,'' he said.
Despite company wide cuts which will see Boart’s global workforce shrink by about 30 per cent, O’Brien said investors should expect further belt-tightening as conditions worsen, SMH reported.
"With market conditions where they are, we're focusing our efforts on what we can control: total costs,'' O'Brien said.
As miners cut exploration budgets, Boart has predicted utilisation rates for its drilling rigs could fall as much as 20 per cent compared to last year.
Some analysts report exploration expenditure this year has dropped 20 per cent.
The Utah based driller said revenue would come in at the lower end of analysts' forecast range of between $US1.466 billion and $US1.726 billion.
“Our primary objectives in the short and medium term are to deliver improved margins and cash flow by creating a more a sustainable cost structure,” O’Brien said.
The mining downturn and sluggish resources spending has also resulted in mining contractor Transfield Services to cut profit estimates and slash 113 jobs.