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Jan 21, 2009

Billiton says cut nearly 2,000 jobs in Chile ops

BHP Billiton (BLT.L) (BHP.AX), the world's largest diversified miner, said on Wednesday that most of the 2,000 job cuts at operations in copper giant Chile target contracted workers as it defers expansion projects.

Billiton announced Wednesday it was axing 6,000 jobs globally as it cuts costs in the face of a commodity price slump amid a global financial crisis.

Ruban Yogarajah, a Billiton spokesman in London, said most of the Chile job cuts had already been implemented as major expansion projects were deferred.

"It's primarily contractors. Eighty-four percent of them are contractors," he told Reuters by telephone. "It's approximately 2,000 in Chile."

The company has a global workforce of some 100,000 people, with 40 percent of those permanent staff and 60 percent contract workers.

In Chile, the company had about 6,000 full-time staff and 12,000 contract workers in operations and projects before the reduction. The company operates the Escondida, Spence and Cerro Colorado mines in northern Chile.

"Really these cuts are more to do with deferring some capital projects rather than production cuts. We're not cutting production, but we are deferring some activities while capital costs remain high," Yogarajah said.

CESCO, which hosts a giant annual copper industry dinner in Santiago in March, estimates planned investments in Chilean copper are down 25 percent in dollar terms since September alone, with most of that due to deferred projects at Billiton's Escondida mine.

Escondida has postponed a decision for its Phase Five expansion of the giant mine for at least 18 months, and cut back on plans to build a massive, $3.5 billion plant to desalinate sea water for mineral processing.

Diego Hernandez, BHP Billiton's president for base metal operations, told journalists in Santiago a decision would be made by the end of the year on new plans to build a plant with half the original capacity intended.

The original plant was to have a capacity of 3,200 liters per second and help support major expansion at the mine.

"A decision will be made by the end of the year on a 1,600-liters-per-second (plant)," Hernandez said. "The plant is linked to (processing) current production capacity, not added production capacity."

At Escondida, Billiton is grappling with a decline in ore grade that is seen reducing copper output by 10 percent in 2009 and the next couple of years. A faulty SAG, or semi-autonomous grinding mill, at the giant deposit has also hurt output.

"What we're seeing is a sharp deterioration in the economic environment in the last quarter of 2008, and so since that time our base metals business has begun addressing the issue and so actually a lot of the head count reduction has already been completed," Yogarajah said. "They've almost all been carried out."

Chile is the world's largest copper producer, supplying about a third of global markets. But falling ore grades at bigger mines and mechanical failures hit output in 2008 and the global financial crisis is pummeling demand.

Source : Reuters
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