BHP Billiton has celebrated sending its one-billionth tonne of iron ore to Japan at a ceremony in Port Hedland to mark almost 50 years of the business partnership.
BHP Billiton has celebrated sending its one-billionth tonne of iron ore to Japan at a ceremony in Port Hedland to mark almost 50 years of the business partnership.
BHP Billiton iron ore president Jimmy Wilson told those at the ceremony that, while demand from the company’s biggest market, China, would continue to grow, BHP’s new stage of growth would continue to value Japan as a major customer.
Japan was BHP’s first customer when it began shipping Western Australian iron ore in the 1960s.
Today, Japan receives 15 per cent of BHP’s iron ore exports, while its customer base in Asia has grown to include South Korea, Taiwan and China.
Japanese groups ITOCHU and Mitsui collectively hold 15 per cent of BHP’s iron ore mine, rail and port infrastructure in WA.
Mr Wilson recognised Japan’s role in growing the iron ore industry in the Pilbara, and the two-way trade whereby steel from WA iron ore made its way back to Australia in the form of heavy industry, technological and electronic equipment.
He said the amount of iron ore sent to Japan so far was “truly staggering”.
Since opening the 35 million tonnes per annum Jimblebar mine in late 2013, BHP has targeted expansion to 270mtpa, largely through productivity and efficiency gains.
“Over the past decade we’ve spent $24 billion in WA’s mines, rail and port infrastructure,” Mr Wilson said.
“It’s appropriate that we take a pause at the moment and now see how much capacity we can eke out.
“We believe we’ll be able to get ourselves up to around the 270 million mark without building an additional mining hub, and without putting additional rail infrastructure in place outside a couple of trains, and without putting in more car dumpers and ship loaders.”
This financial year, BHP provided guidance of producing 217mtpa. The final figure will be announced in a few weeks.
As part of its productivity push, BHP recently made a few hundred of its 16,000 workforce redundant.
Leaked reports from consultant McKinsey and Company have recommended a staff cull of up to 20 per cent.
Mr Wilson declined to provide an exact number of people who had been, and would be, affected by job losses.
“If there are numbers that have leaked out as a result of consultant reports … that doesn’t necessarily mean that that is going to be that in the business,” Mr Wilson said.
“Management make those decisions and make those decisions on a risk basis.
“You can’t just give a blanket answer and say these people are safe and these people aren’t.
“The large majority of our folk don’t have to worry about their jobs but there are some folk that will be impacted.”
He said front-line jobs such as truck drivers, train drivers and maintenance workers were subject to cuts, but that recruitment for those positions would continue regardless because of high attrition rates for those roles.
BHP has repeatedly said the trend for more urbanisation in China would continue to drive increased demand for iron ore.
BHP health safety and environment, marketing and technology president Mike Henry said in recent weeks lower cost Australian iron ore had been displacing higher cost product in China.
“(It’s) difficult to quantify how much is shut-in at this point,” he said.
Mr Henry said price fluctuations had stayed within BHP’s predicted range and that China’s preference for higher quality iron ore was favourable for BHP, which would get paid more for its high quality iron ore.
“There has definitely been a widening of the spread between high and low-quality product and changing in premiums,” Mr Henry said.
“Blast furnaces will be willing to pay a premium and be discounting more than they have over 10 years.”