BHP asks Suppliers to Reduce Expenditure

Submitted by Jim Thesiger on 2 October, 2009 - 08:20

Australia based mining giant BHP Billition (BHP) has demanded a 20 percent reduction on which it is currently paying for supplies and labours something that has become a major headache for the North Queensland businesses. BHP’s announcement was send to the suppliers of Cairns and Townsville in the form of a letter signed by general manager Robert Fulker which carried the clear message that the suppliers might see a decline in profits and wages. It is assumed that around 100 Cairns families fly in and out of the lead and zinc mine which is located at 250 km southeast of Mt Isa.

In the letter, it was mentioned that the fall of zinc and lead price and the uprising cost which has increased 50 percent than what it was three years ago were the key reasons behind the cost cutting ultimatum. It was also stated that the mine and the company profit dropped by as much as 60 per cent or even more. The letter clearly indicated that the mine is at the risk of being shut down if the cost is not reduced. Mr. Fulker termed the situation as extremely serious and stated that necessary steps have to be taken in order to protect the best interest of the shareholders, employees and suppliers. The suppliers who will reduce their prices by 20 percent are going to get the favour in future however, the ones who will fail to do so are not going to get the preference, Mr. Fulker added.

Dawson Engineering’s Sharon Dawson refused to make any comments regarding the BHP letter and vowed to continue working closely with Cannington in order to ensure future and ongoing jobs for its employees. A BHP worker expressed his disappointment regarding the letter terming it as a “slap” on the face of the suppliers.