WA chills as BHP Billiton, Rio Tinto and Fortescue cut $20b spending – by Julie-anne Sprague (Australian Financial Review – August 30, 2015)


A dramatic $20 billion cut in operational spending by the nation’s three biggest iron ore miners is chilling a West Australian economy already under stress from falling investment in resources-related construction.

Analysis by The Australian Financial Review reveals that since 2012, BHP Billiton, Rio Tinto and Fortescue Metals Group have cut the amount they spend on extracting resources by $US14.3 billion ($19.9 billion).

While this figure includes BHP and Rio’s global operations, the majority of the cuts have been generated from their West Australian iron ore operations.

This excludes massive cuts to capital expenditure. With laser like precision the miners are tightening the cost screws beyond cutting staff and salaries.

They’re cutting meals served on flights to remote mine sites, pulling biscuits from the tea rooms and reducing the number of uniforms issued to staff.

Rio Tinto swapped leaving safety glasses and gloves in a box for staff to take for a vending machine. It has cut use by staff – who must swipe their employee card to access the free safety gear – by between 15 per cent and 20 per cent.

Rio Tinto iron ore managing director Andrew Harding said the move, which makes staff accountable for consumption, saves Rio millions of dollars each year.

The cuts in turn place pressure on suppliers.

Wesfarmers’ industrial and safety business supplies safety glasses to miners, which are among more than 200,000 various industrial and safety products it sells.

It has felt the impact of the downturn, responding by shedding about 10 per of its workforce in the past few years as part of restructuring its operations.

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