BHP Suspends Smallest Iron Ore Operation to Boost Efficiency

BHP Billiton Ltd. (BHP), the world’s biggest mining company, said it’s suspending output at its smallest iron-ore operation to cut costs.

“We have made the decision to suspend production at our Yarrie operation until further notice,” Jimmy Wilson, BHP’s iron ore president, said today in an e-mailed statement. BHP took this decision as “an additional productivity measure” for the iron ore business.

BHP is focused on cost cutting and efficiency gains after commodity prices declined. The Melbourne-based company last week announced $4.9 billion in annualized cost savings, helping to boost profits after a decade-long boom in prices waned.

The Goldsworthy joint venture, of which Yarrie forms a part, is located east of Port Hedland in Western Australia state. Goldsworthy produced 1.1 million metric tons of iron ore in the year to June 30, BHP said in a July 17 production report.

BHP’s next-smallest iron ore asset is the Samarco operation in Brazil, which produced 11 million tons over the same timeframe. Total iron ore output during fiscal 2013 was 170 million tons, BHP said.

Iron ore for delivery to the port of Tianjin in China dropped yesterday to $119.90 a dry metric ton, the lowest since July 2.

The company will move employees at Yarrie to other parts of the business where possible, it said.

BHP is in the process of transitioning the management of its Western Australia iron ore business, taking over as owner-operators. The transition will be complete by the end of June when it plans to take over management of the last contractor site, Orebody 18, it said in the same statement.

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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