Falling commodity prices, high costs and a strong Australian dolla have hit Australian miners profits
Falling commodity prices have further hit Australian miners, with BHP Billiton Monday announcing it will stop production at a Queensland coal venture and Xstrata Coal saying it will slash 600 jobs.
The moves follow last week's decision by iron ore major Fortescue Metals to defer several planned expansions and slash capital spending by US$1.6 billion to cope with commodity price volatility.
Anglo-Australian mining giant BHP said the BHP Billiton-Mitsubishi Alliance will cease production at its Gregory open-cut mine, part of the Gregory Crinum complex near Emerald, Queensland, from October 10 and review other assets.
"Gregory open-cut mine production was no longer profitable in the current economic environment of falling prices, high costs and a strong Australian dollar," BMA said, adding that the underground mine would still operate.
Stephen Dumble, BMA asset president, said closure was the only option given production costs exceeded revenue. The move will impact about 300 staff.
"We will work closely with our workforce and look for opportunities to redeploy affected employees to other BMA operations," he said.
The development came as Xstrata Coal announced it would slash jobs as part of an ongoing review of its operations in Australia, given low coal prices, high costs and the Australian dollar's strength against the greenback.
"Following this review, and in keeping with the cost-savings objectives announced at our half-year earnings, we will be reducing our employee numbers by approximately 600," the firm said in a statement.
The reductions will include contractors and permanent positions, the company said, without breaking down the losses by site.
"We do not expect a material impact on Australian production volumes," it said, adding that it was also cutting some roles at corporate headquarters in Sydney and consolidating office-based operations in Queensland.
Coal prices have fallen sharply in recent months, with Resources Minister Martin Ferguson late last month declaring the mining boom was over in price terms.
"No one can deny it," Ferguson said. "Just think about it, coking coal a short time ago was $320 a tonne, it's now $220 a tonne; iron ore was $180 a tonne, it's now $105; thermal coal was $220 a tonne, it's now $80 a tonne."
BHP Billiton last month delayed expansion of its huge Olympic Dam project in South Australia after posting a 34.8 percent slump in annual net profit, in a sign the global slowdown was hurting commodities.
The world's biggest miner put plans to grow the copper and uranium mine in South Australia on hold after a 15 percent plunge in underlying earnings due to softer prices for most of its products through 2012.