BHP-Mitsubishi axing 700 coal mining jobs
The BHP Billiton (ASX, NYSE:BHP) and Mitsubishi said Tuesday they plan to cut about 700 jobs from their joint Australian coal mining operations in Queensland, continuing a cost-cutting drive that began about 18 months ago.
The BHP Billiton Mitsubishi Alliance (BMA), the world's biggest exporter of steelmaking coal, blamed market conditions for the measure, adding that over-staffing in the current environment was threatening the viability of its business.
The job cuts, accounting for about 7% of the joint venture's total workforce, follow a review of their joint operations, which found employee numbers were higher than required to operate safely and efficiently, the partners said in a statement on Tuesday.
Coking coal prices are near their lowest levels in seven years, currently trading at about $110 a tonne. Rising supplies of the commodity have outpaced demand, which has caused prices to fall more than 20% so far this year.
BHP, which is the world’s No. 1 seaborne coking coal producer, has previously defended the coal division on the grounds that the commodity is expected to remain the main source of affordable energy for the fastest-growing Asian economies. It has also argued its Queensland assets are considered among the best quality coking coal in the world.
Chief Executive Andrew Mackenzie, in turn, has repeatedly called its coal unit one of its "four pillars of growth" along with iron ore, copper and petroleum products.
However, the firm has been under pressure to lower operating costs because of a slump in iron ore and coal prices, which are used to produce steel.
Last week, it also announced plans to cut jobs at its Port Hedland iron ore mines in Australia.