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Fri, Mar 27, 2009 - Page 10 News List

BHP Billiton to axe jobs, rival Rio Tinto closes iron smelter

WEAK DEMAND Union members said that 400 contractors for BHP would lose their jobs, some of whom have worked for the company for 10 years


The world’s biggest miner, BHP Billiton, said yesterday it would axe Australian jobs, while rival Rio Tinto shut down an iron ore smelter, in response to weakening world commodity demand.

Responding to union claims that up to 400 contract jobs would be lost in Queensland state, a spokeswoman said BHP believed metallurgical coal output for this year would be approximately 10 percent to 15 percent below capacity.

“We adjust our contract requirements to suit the level of activity of our business,” Samantha Evans said.

She would not confirm or deny the exact number of jobs cut.

BHP announced in January it would cut about 6,000 jobs worldwide in response to the global economic downturn, saying it expected to lose contractors as conditions deteriorated.

The mining union said 400 contractors had been told they would lose their jobs, some of whom had been working for BHP for 10 years.

“We don’t know whether this means some of the planned expansions are not going ahead, or if they are mining to a lesser extent,” said Steve Pierce, of the Construction, Forestry, Mining and Energy Union.

The news came as rival Rio Tinto announced the temporary closure of an iron ore smelter in Western Australia, citing depressed pig iron prices and poor market outlook.

Pig iron prices are down to a quarter of their value a year ago at US$230 a tonne compared with US$900 a tonne.

A skeleton staff of 40 will be kept on to maintain the Kwinana plant, established in 2006 as a joint venture between Rio, China’s Shougang, Japan’s Mitsubishi and Nucor Corporation of the US.

Most of the remaining 100 workers will be offered redundancies or relocated to other Rio projects, the company said.

“This is a tough decision, but unfortunately one that relates directly to the current market conditions and the uncertainty of a market recovery in the near term,” Sam Walsh, chief of Rio’s iron ore operations, said in a statement.

Rio has already said it would axe 14,000 jobs.

At the close of share trading in Sydney BHP shares were up 1.56 percent at 33.78, while Rio was 1.43 percent firmer at 54.70.

Debt-laden Australian mining companies have attracted the attention of China’s state-owned metals sector, with takeover proposals from Beijing’s Minmetals and Chinalco for OZ Minerals and Rio Tinto respectively being considered by Australia’s foreign investments review board.

Hunan Valin Iron and Steel Group last month took a 16.5 percent stake in Australia’s Fortescue Metals.

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