BHP Melbourne to shrink 37%: reports


Reports from multiple sources suggest mining giant BHP will continue its simplification push by cutting 37% of staff at its central office in Melbourne.

While still one of BHP’s headquarter offices (along with its London office), the move will see BHP’s Melbourne site fall beneath its Singapore hub in terms of staff count.

Reports suggest BHP will shrink from a recent high of 480 staff in Melbourne, to around 300.

Since BHP spun off its non-core assets into new business South32 in May, it has reduced its headcount from 480 to 400 in Melbourne. Now several agencies – including both News Ltd and Fairfax in Australia – have said the miner will cut 100 more jobs over the next year and a half.

Cuts include moving BHP’s treasury to the London office, according to reports. The legal department is reportedly set to be reduced by more than half.

The cuts at head office follow reductions to the miner’s labour force in response to the decline in the iron ore price over the past 18 months.

BHP has responded to declining mining markets by seeking out greater efficiencies in its operations, and if true, these reports suggest its white collar workforce is certainly not immune to that push.

Since dipping below US$50 a tonne earlier this year, iron ore looked to be slightly refreshed, sitting at around the US$60 mark for the past couple of months. But over the last three weeks, the price has dropped back down again, reporting at US$51.40 a tonne overnight.

BHP is certainly not alone in its cost-cutting drive.

Since iron ore dipped under US$50 a tonne for the first time in 2015, Fortescue has staged a massive cost cutting program of its own, and has reportedly significantly lowered its breakeven price for iron ore. Rio and BHP both operate at just over US$30 a tonne breakeven, and Fortescue is believed to have moved substantially closer to that price, from its prior breakeven of around US$50.

But with market demand stagnating, and more volumes still set to come online from Australian newcomer Roy Hill, as well as Brazilian giant Vale, analysts aren’t tipping the price to head north any time soon.


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