Top global miner BHP Billiton said it plans to shed an undisclosed number of jobs in iron ore, its most profitable business, as it battles weaker demand and higher costs, adding to mining job losses in Australia.
The cuts in iron ore, following the closure of two of BHP's coal mines, will stoke worries about weakness in the Australian economy, which has been underpinned by booming demand for iron ore and coal, now slowing due to cooling growth in China. What you've got to expect across the broader mining sector at the moment is that they're all going to be cutting jobs, said Glyn Lawcock, an analyst at UBS. Clearly in the last few years what you've seen in the mining industry is excess.
Global miners Rio Tinto †and Xstrata †have both announced job cuts at their Australian operations over the past month.
Concerns about weaker growth led the Reserve Bank of Australia to cut interest rates by 25 basis points in a surprise move last week following a dip in jobs, its third cut this year.
It could move again next month if the jobs report for September, due on Thursday, fails to show a small rise in employment. Australia's success story takes chilling turn †
Job losses in BHP's iron ore arm, the business that made up more than half the group's earnings last year, reflect weaker Chinese steel growth, which led BHP to shelve a $20 billion expansion at its Port Hedland iron ore port in August.
The International Monetary Fund reinforced the bearish view on China on Tuesday, cutting its forecast for Chinese growth this year to 7.8 percent from 8 percent.
Weaker demand from China has already hit BHP's coal business, forcing it to close two mines where it had nearly 800 workers. It has said it aimed to redeploy most of those workers to other mines.
IRON ORE SLUMP
Iron ore producers have been hammered by a 42 percent drop in prices from this year's high to a three-year low of $87 last month. Prices have since rebounded to $110, but remain below what had been seen as a floor price at $120.
BHP said on Tuesday it had reviewed the iron ore division and was letting employees know about a reorganisation plan, which would result in some job cuts.
BHP Billiton Iron Ore's belief in the longer term attractiveness of the iron ore market remains