BHP Billiton Ends Deal With Mining Contractor Downer EDI
BHP Billiton Ltd. has now decided to end their current contract with Downer EDI Ltd. which was in place to clear ground at its Goonyella Riverside mine in eastern Australia. This was a segment of the larger effort to cut the costs of its Australian coal operation. This call to end the contract embodying what’s known as pre-strip work on land around the existing mine creates the significant aftermath of 427 contractors being cut from work. BHP reported that this action was necessary in the name of the continued viability of its coal business.
While rich in resources, Australia is up against a severe slowing in mining investment. This slowdown is made all the more severe as it comes off the decade-long resources boom Australia had been enjoying. Thousands of jobs have been cut across the industry, particularly in mining-focused states such as Queensland and Western Australia, prompting the central bank to cut interest rates to a record low to support other parts of the economy. The combination of China’s economic growth tailing back from its previously blazing pace in addition to Australia’s surge in supplies continues to put extra pressure on Australian mining companies maintaining the viability of their operations.
Dean Dalla Vale, president of BHP's coal division, said the termination of the contract with Downer continued cost-cutting measures underway for more than 18 months. “Further measures to address wage and other costs are being undertaken at all mines in Queensland and New South Wales as we continue our detailed reviews of every aspect of our coal operations to ensure every operation remains operating cash positive,” Mr. Dalla Vale said. “The coal industry is undergoing a difficult transition and to be globally competitive we have to reset the cost base of the business…Coal producers face challenging decisions.”
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.