Largest Global Miner Announces Restructuring As Profit Hits An 8-Year Low

BHP Group BHP, the world’s largest mining company, has initiated a significant restructuring of its global operations. The company is starting in Australia, facing a nickel market slowdown, which could extend into 2030.

The management aims to cut costs and streamline productivity, particularly within its Australian operations, as CEO Mike Henry expressed concerns about wage inflation in that market.

"As part of our continuous improvement in how we approach work, we have made some changes to better align work activities within assets and support quicker decision-making," a BHP spokesperson told Bloomberg. There were no comments on job cuts.

BHP — a major producer of everything from iron ore to copper and metallurgical coal — suffered a sharp profit slump in its fiscal first half. Its profits declined a staggering 86% year-over-year to $927 million.

Now read: Nickel’s Nosedive: 40% Yearly Drop Puts Miners In A Tight Spot

While that was primarily due to a $2.5 billion writedown in its nickel business, most major miners have been hit by cost inflation and softer commodity prices. BHP noted the higher cost of mining than before the COVID-19 pandemic, warning that labor costs remain a critical risk while energy and logistics pressures have declined.

Australian Prime Minister Anthony Albanese expressed concern for the nickel sector, recently stating that the government is looking at "providing further support with a smart, targeted and time-limited policy," per The Guardian.

Still, Henry believes that more than Australian federal tax credits and royalty relief at the state level might be needed to stop the shutdown of Nickel West.  The Western Australia site includes mines at Leinster and Mt. Keith in the northern Goldfields, the Kalgoorlie nickel smelter, the Kambalda nickel concentrator and its Kwinana refinery. The total headcount is about 3,000 employees, but the operation hasn't been profitable since 2018.

Despite these challenges, BHP’s half-year underlying profit slightly exceeded analyst expectations, supported by strong iron ore prices. The company expressed cautious optimism about a demand recovery in the developed world in the next 12 months, with a more balanced global economy expected to impact the mining industry in 2024 positively.

Also read: Energy Fuels Ramps Up: Colorado And Wyoming Mines To Skyrocket Uranium Production

Image created using artificial intelligence with Midjourney.