Massive 290 redundancies at Mt Arthur Coal

BHP-billiton-mt-arthur_1.jpg

Any prospect of Mt Arthur coal mine going on the chopping block has been delayed with the announcement that BHP will implement cost-cutting strategies with the retrenchment of 290 workers.

The company advised employees this morning that the cuts were intended to strengthen the commercial viability of the mine in the face of a $9 million EBIT loss in the NSW Energy Coal business for the six months leading up to the end of 2015.

BHP said in the past 18 months thermal coal prices had declined on average by 27 per cent.

NSW Energy Coal Asset president James Palmer said the new changes were essential to ensuring the commercial viability of Mt Arthur Coal, and keeping BHP employment opportunities ongoing in the Hunter Valley.

“Despite extensive work over the past two years to reset our production costs and safely improve the mine’s productivity, Mt Arthur Coal must continue to significantly improve performance to be a globally competitive operation,” Palmer said.

“This decision was not taken lightly because we understand it will have a range of impacts on our workforce, their families and the local community. However, the changes will put Mt Arthur Coal on a more sustainable footing for the future.

“As we implement the changes announced today, we will continue to work closely with employees and the local community to manage the impacts of the decision and provide regular updates about the consultation process.”

BHP has already cut 300 positions from Mt Arthur coal over the past two years however this will be the largest round of redundancies yet.

In a recent conference BHP CEO Andrew MacKenzie said the Mt Arthur coal asset was in the same boat as other weak assets such as NickelWest and the Cerro Colorado copper mine, suggesting the mine might be at risk of going into care and maintenance.

The CEO also suggested that marginal mines could retain greater contractor workforces if workers were prepared to work for less per person than permanent employees.

“With recent movements, our Mt Arthur is probably in that situation right now,” he said in February.

A statement from BHP said the company was engaged in consultation with workers, and was also providing support services for those facing retrenchment.

Australian Mining has contacted the CFMEU NSW Mining and Energy division for comment.