BHP’s cost cutting measures reach iron ore division

BHP Billiton (ASX, NYSE:BHP)(LON: BLT), the world’s No. 3 iron ore producer after Vale (NYSE: VALE) and Rio Tinto (ASX, LON: RIO), is looking at further cost cuts at its iron ore operations, including extending a staff hiring freeze in place since September last year.

Speaking at a business function in Perth, the company’s iron ore president, Jimmy Wilson, said cooling markets provide an opportunity for BHP to increase production volumes using its existing equipment.

“We are going into a phase now where there’s less demand (…) as a percentage, not less demand as a magnitude, because there’s still a lot of demand in the iron ore sector,” he was quoted as saying by AAP.

However, analysts such as Business Spectator columnist Brett Cole, believe that urging the company’s divisions to achieve greater efficiency is not enough to keep the company afloat.

“…Until there is evidence that Chinese steel mills want more iron ore and coal, the miner’s stock is likely to suffer,” Cole wrote.

So far BHP has not laid off anyone from its iron ore workforce, but last week the miner sold a 15% stake in a West Australian Jimblebar iron ore mine to Japan’s Itochu Corporation and Mitsui for $1.5 billion.

 (Image Western Australia iron ore operations, courtesy of BHP)

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