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Turmoil forces BHP to slash 6,000 jobs
By Rohan Sullivan |
January 22, 2009, Thursday
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Print Edition
Print Edition
MINING giant BHP Billiton announced plans yesterday to slash its global work force by 6 percent - about 6,000 jobs - as it rushes to cope with plummeting demand because of the global financial crisis.
The cuts and BHP Billiton's latest production forecasts underscore a sharp turnaround in the fortunes of big miners as the worldwide downturn bites into the previously insatiable appetite of China and other emerging economies for steel and other mineral-based products.
Treasurer Wayne Swan, the Australian government's top finance official, warned that the mining boom that sustained the country's economy for more than a dozen years may be coming to an end.
In a release to the Australian Securities Exchange, BHP Billiton said it would immediately move to suspend work at Ravensthorpe Nickel Operation and to cut production at its Mount Keith nickel mine, both of them in Western Australia state.
In total, 2,100 workers and contractors would lose their jobs at those sites.
BHP Billiton Chief Financial Officer Alex Vanselow later told reporters that there would be additional job losses by June as the company tries to slash costs amid declining demand.
About 550 jobs would be lost at the company's operations in Pinto Valley, Arizona, 200 more at Olympic Dam in South Australia state, and 2,000 jobs lost at its base metals operations in Chile.
"These are very serious types of decisions and we don't take them lightly, but at the end they are necessary and they are the correct decisions," Vanselow said.
Swan cited the job losses as a tragic result of the worldwide downturn.
"What we are seeing is a sober reminder of the unwinding of the mining boom, caused by the global financial crisis and in particular the slowing of the economy in China," he said.
BHP Billiton estimated that the job cuts will result in a one-off total cost of about US$500 million.
The wind-down at Ravensthorpe and Mount Keith will result in a US$1.6 billion impairment charge in the company's earnings for the six months to December 31, and an estimated pretax charge of about US$400 million in the half-year to the end of June 2009.
The price of nickel, used primarily in the production of stainless steel, has dropped from highs of around US$51,000 per metric ton in May 2007 to approximately US$11,550 a metric ton now.
The cuts and BHP Billiton's latest production forecasts underscore a sharp turnaround in the fortunes of big miners as the worldwide downturn bites into the previously insatiable appetite of China and other emerging economies for steel and other mineral-based products.
Treasurer Wayne Swan, the Australian government's top finance official, warned that the mining boom that sustained the country's economy for more than a dozen years may be coming to an end.
In a release to the Australian Securities Exchange, BHP Billiton said it would immediately move to suspend work at Ravensthorpe Nickel Operation and to cut production at its Mount Keith nickel mine, both of them in Western Australia state.
In total, 2,100 workers and contractors would lose their jobs at those sites.
BHP Billiton Chief Financial Officer Alex Vanselow later told reporters that there would be additional job losses by June as the company tries to slash costs amid declining demand.
About 550 jobs would be lost at the company's operations in Pinto Valley, Arizona, 200 more at Olympic Dam in South Australia state, and 2,000 jobs lost at its base metals operations in Chile.
"These are very serious types of decisions and we don't take them lightly, but at the end they are necessary and they are the correct decisions," Vanselow said.
Swan cited the job losses as a tragic result of the worldwide downturn.
"What we are seeing is a sober reminder of the unwinding of the mining boom, caused by the global financial crisis and in particular the slowing of the economy in China," he said.
BHP Billiton estimated that the job cuts will result in a one-off total cost of about US$500 million.
The wind-down at Ravensthorpe and Mount Keith will result in a US$1.6 billion impairment charge in the company's earnings for the six months to December 31, and an estimated pretax charge of about US$400 million in the half-year to the end of June 2009.
The price of nickel, used primarily in the production of stainless steel, has dropped from highs of around US$51,000 per metric ton in May 2007 to approximately US$11,550 a metric ton now.
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