BHP Plans to Reduce Iron Ore Output
BHP Billiton (NYSE: BHP), the world's largest mining company, plans to scale back production of iron ore in its home country of Australia. The company has begun to discuss re-deployment and job losses with workers at its iron-ore operations in the remote western Pilbara region, the Wall Street Journal reported.
BHP Billiton is the world's third-largest iron producer behind Brazilian mining giant Vale (NYSE: VALE) and rival Rio Tinto (NYSE: RIO), a company BHP tried to acquire before the financial crisis. BHP did not specify how many layoffs are being planned in Australia.
China, the world's largest purchaser of iron ore, is expected to purchase between 45 million and 55 million metric tons of the commodity in 2013. While a recent bounce in prices indicated some restocking may be under way, analysts are saying slack demand from China could crimp prices and has prompted moves such as the layoffs being announced by BHP.
Even with China's recently announced $158 billion infrastructure, analysts expect iron ore prices will not recapture their previous highs next year due to the slowing global economy.
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