May 17, 2020

BHP Billiton Considering Cutting 3,000 Jobs in Australia

Australia
BHP Billiton
Iron ore
job cuts
Admin
2 min
BHP Billiton Considering Cutting 3,000 Jobs in Australia
BHP Billiton is looking to cut more than 3,000 jobs from its iron ore division in Australia.The company has already eliminated more than 500 jobs in rec...

BHP Billiton is looking to cut more than 3,000 jobs from its iron ore division in Australia.

The company has already eliminated more than 500 jobs in recent months, including 100 from its headquarters in Perth, and the potential for more is looming. Australia’s once-booming mining sector is rapidly disappearing as China’s demand for imported materials such as iron ore, coal and copper cools down.

Many sources around BHP’s Port Hedland port operations suggest the cuts are a result of a recent internal review conducted by managers inside BHP’s iron ore operation. A broader review was conducted by management consulting firm McKinsey and Company.

"BHP Billiton Iron Ore regularly undertakes improvement initiatives and organizational reviews as part of an ongoing focus on productivity, and we have engaged external consultants to assist with this process," a spokeswoman for BHP said.

According to sources, the review by McKinsey and Company recommended BHP shed up to 20 percent of its Western Australia workforce, or more than 3,000 positions.

"We have been open with our employees about the work being done to improve productivity, and the review, and we hold regular employee town hall meetings and question and answer sessions with the business leaders as a matter of course," the spokeswoman reiterated.

The cuts by BHP Billiton are in an effort to reduce costs to the level of major rival Rio Tinto on a per ton basis.

According to Gavin Wendt, a mining analyst for MineLife in Sydney, the cuts are eerily similar to the coal industry.

"Iron ore miners such as BHP are in the early stages of going through what the coal miners have been experiencing. In effect, they are being asked to make do with less."

Iron ore prices have dropped more than 30 percent this year. The falling prices could potentially force China to close up a fifth of its domestic mine production, actually benefiting BHP and other Australian producers. 

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May 7, 2021

Lithium producers bullish as EV revolution ramps demand

Lithium
Electric Vehicles
Albemarle
SQM
3 min
Lithium producers are drawing optimism from rising prices for the electric vehicle battery metal

Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.

Lithium

Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.

Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.

Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.

U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.

Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.

The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.

Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”

Albermarle

Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.

Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.

“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.

The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.

Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.

Electric Vehicles

Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.

Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.

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