Kumba to slash jobs

The benchmark price of iron ore, BHP’s top earner, has slumped more than three-quarters since its 2011 peak, while oil this month plunged below $30 a barrel for the first time in 12 years. The Bloomberg world mining index of 80 stocks, including BHP and Rio Tinto Group, has lost more than 40 percent in the past 12 months amid concern over a weaker pace of growth in China, the biggest commodities consumer, and supply gluts in energy to metals.

Iron ore output in the three months to December 31 rose 1 percent to 57 million tons, BHP said. That missed the median estimate of 59.3 million tons among seven analysts surveyed by Bloomberg. Rio Tinto said on Tuesday that its iron ore output climbed 10 percent in the final quarter of 2015.

Petroleum output fell 5 percent to 60.2 million barrels of oil equivalent in the quarter compared with a year earlier, BHP said. That beat the median estimate of 58.4 million barrels among seven analysts. Fullyear guidance was maintained at 237 million barrels.

“Commodity prices fell substantially in the first half of the 2016 financial year, putting pressure on the whole resources sector,” chief executive Andrew Mackenzie said. BHP was “committed to protecting our strong balance sheet so we have the financial flexibility to manage further volatility”. – Bloomberg KUMBA Iron Ore had told the National Union of Mineworkers (NUM) that it would issue lay-off notices this year if low prices persisted for the steel-making ingredient, the union’s general secretary said yesterday.

“The price has put them in dire straits and there is a prospect of them issuing a section 189 notice at Sishen mine,” NUM general secretary David Sipunzi said.

He was referring to the regulatory process employers must follow before they lay-off staff. “They have been trying to sensitise us to this possibility. If the price remains like this for a few months they will have no choice but to issue a section 189 notice.”

Officials from Kumba were not available for comment.

The group has said it plans to reconfigure its Sishen mine, the largest iron ore operation in Africa, and is targeting 2016 production there of 26 million tons, down from a previous guidance of 36 million tons.

Lay-offs are a politically thorny issue in South Africa, where the jobless rate is about 25 percent and local elections are expected this year. The NUM is also a key political ally of the ANC.

Sipunzi said he expected to see more lay-off notices this year from other sectors, but the union wanted to work with companies to find ways to minimise job cuts.

In line with other commodities, prices for iron ore have been sliding due to oversupply and slowing economic growth in China. – Reuters