Big miners begin to cut

Advertisement

This afternoon Rio announced that it would start:

…cutting staff in Australia and closing its Sydney office as it battles falling commodity prices and threats to demand from Europe’s debt crisis.

Some 30 support and services staff in Sydney and an undisclosed number of employees at the company’s much larger operations in Melbourne would be cut, said Rio Tinto’s Australian manager David Peever.

“We are undertaking a review of our support and services functions. There will be a reduction in the size of our Melbourne office and, yes, we do intend to close our Sydney office as well,” Mr Peever said from Paris.

“It’s just making sure we are building in resilience in our business to deal with what is essentially a difficult time. We are seeing downturns in commodity prices, European circumstances are hovering over us, and we need to make sure we are very measured in terms of our approach to cost control,” he said.

Although it’s yet to hit the tape, BHP also announced this morning that:

Advertisement

BFW 07/31 23:11 *BHP REVIEWING OVERHEAD COSTS, SEQUENCING OF PROJECTS
BN 07/31 23:11 *BHP SAYS IRON ORE PROJECTS IN EXECUTION TO CONTINUE :BHP AU
BN 07/31 23:11 *BHP REVIEWING OVERHEAD COSTS, SEQUENCING OF PROJECTS :BHP AU
BFW 07/31 23:11 *BHP BILLITON SAYS FOCUSES ON CUTTING COSTS AS PRICES FALL
BN 07/31 23:11 *BHP BILLITON COMMENTS IN E-MAILED STATEMENT :BHP AU
BN 07/31 23:11 *BHP BILLITON SAYS FOCUSES ON CUTTING COSTS AS PRICES FALL
+—————————–————————————————-+
BHP Reviewing Overhead Costs, Sequencing of Projects
2012-07-31 23:16:47.284 GMT
By Elisabeth Behrmann
Aug. 1 (Bloomberg) — BHP Billiton said it’s focusing on
cutting costs as commodity prices fall and operating expenses
rise, including a review of its overhead costs and the
sequencing of its major projects, according to an e-mailed
statement.
* Iron ore projects in execution to continue: BHP
NOTE: BHP has been due to decide on 3 major projects by end-yr:
Olympic Dam in South Australia, Port Hedland outer harbor
expansion and Jansen potash in Canada {NSN M7WRYE1A1I4H <GO>}

This is why Macro Investor is short mining services. June 2012 ABS Capex is out at the end of this month and will be a very interesting release indeed. I reckon it won’t be until the following quarterly release that softening plans begin to show up but that is what is coming, and not in two years.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.