BHP to Cut Jobs After Shelving Olympic Dam Plans - State Premier

   By Robb M. Stewart 
 

MELBOURNE--BHP Billiton Ltd. (BHP) is set to cut some jobs in South Australia state following its decision to shelve a US$30 billion plan to build what would have been the world's largest open-pit mine alongside its existing underground Olympic Dam copper and uranium operation, state Premier Jay Weatherill said Thursday.

Mr. Weatherill said he had been briefed by the mining company regarding the extent of layoffs, but declined to say how many people would be affected. He said BHP had indicated it would speak to its workforce in the state soon.

"It is a matter for BHP to announce to its own workforce," Mr. Weatherill said on the sidelines of a luncheon event in Adelaide, a recording of which was released by his office. He added the roughly 3,500 jobs at the mine near the town of Roxby Downs would be maintained.

BHP on Wednesday said its expansion plans for Olympic Dam had been derailed by escalating construction costs, as well as weaker commodity prices and the strength of the Australian dollar. The company will instead investigate an alternative, less capital-intensive design for an open-pit extension to the mine, but added it wasn't likely to approve any new major projects until at least mid-2013.

"We are not going into detail on specific adjustments, but clearly there will be an impact on jobs in some areas," a spokeswoman for BHP in Melbourne said.

BHP and other major mining companies have intensified their focus on cutting costs as they have been squeezed by higher costs and weaker prices in recent months. Chief Executive Marius Kloppers told reporters Wednesday that the company had cut some jobs already in its various operations, including hundreds of people in its aluminum and nickel businesses over the last six months.

The coal industry in Australia's eastern states has been particularly hard hit by a slump in prices as demand from China and other countries has weakened. "There is broad industry movement towards personnel reductions, contractor stand-downs and so on in that coal industry," Mr. Kloppers said.

Write to Robb M. Stewart at [e-mail]

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