UPDATED: BHP to cut 1100 coal jobs

BHP Billiton will sack 1100 workers from its metallurgical coal mines as it moves to cut output over the next six months.
UPDATED: BHP to cut 1100 coal jobs UPDATED: BHP to cut 1100 coal jobs UPDATED: BHP to cut 1100 coal jobs UPDATED: BHP to cut 1100 coal jobs UPDATED: BHP to cut 1100 coal jobs

Marius Kloppers - BHP CEO

Angie Tomlinson

A BHP spokesperson told ILN the majority of job losses will come from Queensland operations and 70% of job cuts will be contractors.

In its half-yearly report released this morning, BHP said while requests for shipment deferrals from some long-term contract customers had not impacted coking coal production in the first half of the 2009 financial year, it was likely to adjust production in the second half in line with weaker demand.

“This will include rebuilding depleted above-ground and in-pit inventories, bringing forward necessary maintenance and adjusting the use of workforce at the operations,” BHP said.

“Production for the second half of the 2009 financial year is expected to be approximately 10 to 15 per cent below current capacity on an annualised basis.”

Shipments in the December quarter were lower as demand weakened and Queensland Coal deferred some sales. BHP expects demand for metallurgical coal to be weaker over the next six months.

While coal was greeted with bad news this morning, it was the miner’s nickel operations that also felt the full brunt of the economic crisis.

BHP has indefinitely suspended operations at the Ravensthorpe Nickel operation in Western Australia and the Yabula processing facility in Queensland.

The company said this morning in a conference call it would sack 6000 employees and contractors worldwide, including 3400 in Australia.

Ravensthorpe will lose 1800 jobs, including 1450 from WA and 350 from Yabulu in Queensland.

The latest closure has been added to scaled back production at the Samarco and Samancor manganese operations in Brazil.

“Given the very challenging environment the whole industry has faced over the past few months, our production performance was particularly strong,” BHP chief executive Marius Kloppers said.

“We have also been quick to take appropriate action to respond to market conditions, such as the previously announced production adjustments and project withdrawals, and we will continue to do so if required.

“We continue to invest in growth, but with a highly disciplined and value-focused approach. We also remain alert to potential value-accretive acquisition opportunities that may arise in the current market.”

During the first half of the 2009 financial year the company did increase production from its metallurgical coal operations as the Queensland mines recovered from floods.

Energy coal production was lower in the December quarter due to scheduled outages at the Navajo open cut and poor geological conditions at the San Juan longwall in the US. San Juan produced 1.09 million tonnes for the December quarter and 3.03Mt for the half year.

The Douglas underground mine in South Africa also decreased output as it ramped down for closure and Cerrejon was impacted by bad weather.

Total metallurgical coal production for the six months to December 2008 was 19.36Mt and energy coal production was 35.27Mt.

In an update on exploration and development activities for the December quarter, BHP said the $US390 million Newcastle Third Port Project was on budget and schedule.

With construction over 35% complete, the new 30Mtpa export coal loading facility on Kooragang Island off Newcastle also has the potential to be expanded to handle 66Mtpa and the first ship loading of coal is targeting late next year.

BHP said its South African thermal coal developments were also on schedule and budget.

The $US450 million Klipspruit project is over 70% complete with the miner saying earthworks, civil and mechanical construction are progressing well.

The open cut mine will be ramped up from 4.8Mtpa of ROM coal to 8Mtpa by July, with investment including equal joint venture participation with Anglo Coal to build the 16Mtpa Phola coal processing plant.

On the production capacity front, BHP said it would have incremental export thermal coal production of 1.8Mtpa in the second half of the year and 2.1Mtpa for domestic production.

BHP’s South African Douglas-Middelburg $US975 million project is 34% complete.

The project includes a 14Mtpa coal processing plant, drawing reserves from across the Douglas and Middelburg Mine Services collieries.

BHP shares were trading down 3.35% mid-morning today at $A27.98.