BHP To Sack 6% of Its Work Force

By Stephen Bell

BHP Biliton Ltd. said it will cut around 6% of its global work force, shut an Australian nickel mine and cut coal production as it responds to low commodity prices and the world-wide economic slowdown.

The moves, which follow simlar cutback by BHP’s competitors including former takeover target Rio Tinto PLC, will likely prompt further profit downgrades ahead of BHP’s first-half results next month, analysts said.
The changes will results in a one-time cost to BHP of around $500 million, most of which relates to a second-half charge at the Ravensthorpe nickel operation in Western Australia, said BHP Chief Financial Officer Alex Vanselow.

Describing the move as a “very serious” response to the global downturn, Mr. Vanselow said the cuts include 2,100 jobs at BHP’s Australian nickel unit, most of them from the Revensthorpe closure.

Around 550 jobs would be lost in the U.S., up to 200 at the Olympic dam copper-uranium expansion project in Australia, 2,000 in Chile base metals and 1,100 in metallurgical coal in Australia, he said.

BHP will cut coal production in Australia by 10% to 15%, equivalent to an annual loss of four million to siz million metric tons of metallurgical coal.
The Chilean losses relate to project deferrals, rather than production cutbacks, he added.

Mr. Vanselow said BHP remains confident in Chinas’ llonger-term growth story, while efforst by the Chinese government to stimulate the economy should show results in the medium term.

“Our biggest concern is not China, which alone is 30% of global consumption,” he said, adding that nations in the Organization for Economic Cooperation and Development, and other developing countries form “the core of the uncertainty that we are seeing.”

The “risks are to the downside” for BHP profit forecast, said UBS abalyst Glyn Lawcock, given the costs associated with job losses and other one-time items. Piror to the report, UBS had cut its fiscal 2009 earnings estimate for BHP by 11% to $11.8 billion.

The lates moves mean BHP has annouced 43.7 billion in wrute-downs as its Australian nickel business in the space of several months, following an earlier &2.1 billion Ravensthorpe charge in November.—Bill Lindsay and Lyndal McFarland contributed to this article.