Mining group South32 plans to cut 390 jobs at its Worlsey Alumina operation in Western Australia’s South West, as part of a global cost-cutting drive following its $US1.7 billion ($A2.4 billion) loss for the half year to December.
Mining group South32 plans to cut 390 jobs at its Worsley Alumina operation in Western Australia’s South West, as part of a global cost-cutting drive following its $US1.7 billion ($A2.4 billion) loss for the half year to December.
South32 announced today plans to cut at least 1,122 jobs from its WA alumina, NSW coal, Australian manganese and South American nickel operations, just weeks after cutting 620 jobs at its South African manganese business.
The Perth-based group said it was more than halfway towards a targeted $US300 million reduction in controllable costs in the current financial year.
The job reductions, to be completed within this financial year, are part of the company's efforts to reduce its cost base amid tough market conditions, it said.
"The continued optimisation of our high-quality operations will strengthen underlying cash flow in what remains a challenging environment," chief executive Graham Kerr said.
The 390 job cuts at Worsley Alumina equate to 15 per cent of total employment, and will be a big blow to the regional economy.
South32 said Worsley's bauxite mining and alumina refining would be fundamentally reorganised into two operations, with the removal of layers of management and functional support.
It also plans to aggregate its procurement activities in the region, to deliver savings of $US65 million in FY17.
Sustaining capital expenditure at Worsley will be cut by 34 per cent to $US41 million in FY17.
The group announced similar cost-cutting measures at its other operations today.
The company said it slid to a net loss for the six months ended December 31, after taking write-downs of $US1.7 billion in its manganese, coal and alumina operations, to reflect the slump in commodities prices.
South32, which listed in 2015 after its demerger from mining giant BHP Billiton, had reported a profit of $US339 million for the prior year.
Underlying earnings, excluding non-cash impairments and the impact of foreign exchange, slumped 94 per cent to $US26 million.
The company had flagged the writedowns earlier in February after revising down its commodity price forecasts.
It expects further charges of $US37 million related to redundancy and restructuring in the second half of the fiscal year.
South32 said it now expects to exceed its previously announced target of strip out $US350 million in costs by the end of its 2018 financial year.
The company has also cut capital expenditure for the current financial year by a further $US150 million, to $550 million. It has, however, maintained its production guidance for the full year.
At 0755 AWST, South32 shares were down 2.25 cents or 2.2 per cent, to $1.11 each, however by 0940 AWST the price had recovered and were up 6.2 cents or 5.5 per cent.
