Mining major BHP Billiton will cut 300 jobs at its Mount Arthur coal mine in the NSW Hunter Valley. The Australian job cuts follows a sharp decline in global thermal coal prices.
“Despite extensive work over the past two years to reset our production costs and safely improve the mines productivity, Mount Arthur Coal must continue to significantly improve performance to be a globally competitive operation,” BHP Billiton’s NSW Energy Coal asset president James Palmer said, according to a Sky News report.
In addition to the plummeting commodity prices, BHP Billiton was also facing a series of setbacks in recent months, which were unparalleled in its 130-year corporate history. The hard hitting one was the legal issues after the dam collapse in Brazil which killed 17 people in November 2015. This jolted the company’s reputation.
Finally, its recent deal with the Brazil government after long-drawn negotiations, along with joint venture partner Vale, solved the compensation issue on the worst environmental disaster.
The losses that BHP incurred after the heavy exposure in the US shale gas industry also added to its woes, reports The Australian Financial Review.
Ultimately, the compensation deal helped BHP to wriggle out of a multi-billion-dollar legal battle after it agreed to rebuild the communities destroyed in the dam break at its Samarco joint venture.
The $3.4 billion (US$2.4 billion) payment deal spread over six years is only half of the $US5.1 billion sought by the Brazilian authorities. The deal also gave a slight relief for BHP in regaining its positive credit rating. Standard & Poor reaffirmed BHP’s A credit rating and removed the negative credit rating clamped on February 1. The plan of BHP to do away with progressive dividend policy also rattled many rating agencies.
The company posted a half-year loss of $7.84 billion. It then slashed the interim dividend from the 60 cents plus to 22 cents per share, reported The ABC. However, the compensation deal on Samarco dam breach has removed the cloud on credit worthiness for the time being.