Several of Australia’s largest coal companies are intensifying job cutbacks, despite signs of an upturn for the commodity.
BHP Billiton BHP.AU -1.26% and Mitsubishi Corp.’s 8058.TO +0.21% Australian joint venture—the world’s biggest exporter of coal to make steel—said on Tuesday it would cut jobs, citing a sustained weakness in prices. The companies said they would shed about 700 jobs from their Australian coal-mining operations in central Queensland as they deepen a cost-cutting drive that has been going on for more than 18 months. The BHP-Mitsubishi alliance employs about 7,000 people in Queensland’s Bowen Basin, which includes two operations it operates with Mitsui 8031.TO +0.19% & Co.
New Hope Corp. NHC.AU -3.07%, one of Australia’s largest coal miners, also is shedding jobs. Chief Executive Shane Stephan said on Tuesday that the company had cut 45 jobs in recent months, equal to about 7% of its workforce. It also has cut hours for many employees. “We see some positive signs for coal, but it is a very challenging operating environment at the current price,” Mr. Stephan said. “Still, you must be very careful as a senior manager to make sure you don’t cut into the bone.” New Hope on Tuesday reported a 21% drop in full-year net. Port Waratah Coal Services Ltd., which operates Australia’s Newcastle port, announced 32 job cuts on Tuesday. The port is the world’s biggest coal-export hub.
Prices of coking coal, which is used to make steel, have been trading near their lowest levels in seven years as rising supplies have outpaced demand. Prices have fallen more than 20% this year. BHP and other Australian miners invested billions of dollars in new projects over the past decade as prices rose thanks to strong demand from China. But softening prices and slower demand growth have prompted many miners to put the brakes on expansion plans and cut jobs at existing projects. BHP last year said it would look to squeeze more out of its mines to safeguard earnings. Some mining executives and analysts in recent months have turned more upbeat on the market’s outlook, saying a string of pit shutdowns should finally kick-start the market by curbing supply. They also forecast a pickup in demand from China and India. Analysts stopped short of predicting a sharp rebound, however, and said any recovery would be gradual. Miners have said more cutbacks are needed as they wait for a recovery in prices.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
Source: http://online.wsj.com/articles/bhp-billiton-mitsubishi-coal-venture-to-cut-700-jobs-1411439370