BHP Billiton Considering Cutting 3,000 Jobs in Australia

BHP Billiton is looking to cut more than 3,000 jobs from its iron ore division in Australia.

The company has already eliminated more than 500 jobs in recent months, including 100 from its headquarters in Perth, and the potential for more is looming. Australia’s once-booming mining sector is rapidly disappearing as China’s demand for imported materials such as iron ore, coal and copper cools down.

Many sources around BHP’s Port Hedland port operations suggest the cuts are a result of a recent internal review conducted by managers inside BHP’s iron ore operation. A broader review was conducted by management consulting firm McKinsey and Company.

"BHP Billiton Iron Ore regularly undertakes improvement initiatives and organizational reviews as part of an ongoing focus on productivity, and we have engaged external consultants to assist with this process," a spokeswoman for BHP said.

According to sources, the review by McKinsey and Company recommended BHP shed up to 20 percent of its Western Australia workforce, or more than 3,000 positions.

"We have been open with our employees about the work being done to improve productivity, and the review, and we hold regular employee town hall meetings and question and answer sessions with the business leaders as a matter of course," the spokeswoman reiterated.

The cuts by BHP Billiton are in an effort to reduce costs to the level of major rival Rio Tinto on a per ton basis.

According to Gavin Wendt, a mining analyst for MineLife in Sydney, the cuts are eerily similar to the coal industry.

"Iron ore miners such as BHP are in the early stages of going through what the coal miners have been experiencing. In effect, they are being asked to make do with less."

Iron ore prices have dropped more than 30 percent this year. The falling prices could potentially force China to close up a fifth of its domestic mine production, actually benefiting BHP and other Australian producers.