Instead of Project Expansion, BHP Billiton Sacks Olympic Dam Workers

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By Vittorio Hernandez | February 7, 2013 10:02 AM EST

Instead of expanding its Olympic Dam project, BHP Billiton (ASX: BHP), the world's biggest miner, is on a contracting mode. On Wednesday, the miner announced job cuts at its copper-uranium-gold project.

Although BHP did not release the number of workers to be axed, reports indicated about 60 would become unemployed. Most of them are operational staff at BHP's Olympic Dam and contractors from its human resources, finance and administrative units in Adelaide.

BHP said it is still finalising the number of affected employees as part of the company's cost-cutting initiatives.

"Olympic Dam continued to focus on reducing overheads, operating costs and non-essential expenditures to ensure it remains competitive in the current environment of sustained lower commodity prices and a strong Australian dollar," a BHP spokeswoman said in a statement on Wednesday.

The spokeswoman clarified that the job cuts are not linked to the cancellation in August of the $30-billion expansion of the Olympic Dam mega project which also resulted in members of the project team whittled down to 50 from 200.

In December, BHP further cut more jobs as a result of the transfer of control of the Olympic Dam project from Australian to the company's base metal division in Chile.

The miner attributed the latest job cuts to weaker prices of commodities in the global market and the strong Australian currency, plus rising operational costs.

In spite of the fresh round of lay offs, BHP has on its Olympic Dam payroll over 3,500 workers. The project is Australia's largest underground mine and one of the largest mines in the world.

Once considered a booming sector, Australia's resource industry continues to recoil from the lower prices of iron ore and coal, causing the loss of a total of 13,000 out of 255,000 jobs during the last six months of 2012, data from the Australian Bureau of Statistics said.

Meanwhile, another crisis is looming over the coal industry as rail drivers in New South Wales are scheduled to walk off their jobs for 48 hours beginning Friday. The strike is the result of breakdown in mediation talks between the Rail, Tram and Bus Union and Pacific National Coal over an enterprise agreement covering 800 employees.

The impending strike threatens the delivery of coal of Xstrata and Whitehaven despite involvement of Workplace Relations Minister Bill Shorten and the Fair Work Commission (FWC) in the negotiations.

Because of this development, the two miners are studying the possibility of applying to the FWC for third-party termination orders to legally prevent the strike on the basis of significant economic harm the industrial action could cause.

At stake is the delivery of 600,000 tonnes of coal valued at more than $55 million which could not move because of 40 idle trains that block the NSW rail lines.

The union sought 9, 7 and 7 per cent pay hikes spread over three years, but Pacific National offered only 4 per cent for the same three-year period.

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