BHP Group undergoes reductions
BHP Announces Layoffs and Mine Closures Amid Challenging Mining Environment
In a move that could shake up the mining industry, BHP Group has announced plans to close several mines in Queensland and lay off 750 employees from its Queensland coal division. The FutureFit Academy, an initiative aimed at attracting new workers, particularly women, to the mining industry, may also be affected.
The mines set for closure include Peak Downs and Broadmeadow coal mines, in addition to the already announced Saraji South coal mine. The decision comes as no surprise, given the persistently low coal prices and high license fees imposed by the Queensland government.
BHP's CEO, Mike Henry, hinted at potential layoffs on August 19, when the company released its full-year 2024/25 (30 June) results. The news underscores the challenging environment for mining companies, with the price of a tonne of coal reaching over $150 in October 2024, but dropping to around $100 per tonne this week, reaching a new three-month low.
Despite these challenges, BHP Group's stock remains a solid hold, with a P/E ratio of 13 and a dividend yield of four percent. However, a stop-loss for BHP Group's stock is suggested at €17.50.
The statement from BHP Group states that the key seaborne supply region of Queensland is not conducive to long-term capital investment under the current license fee system. The FutureFit Academy, which has been instrumental in attracting new talent to the industry, may be closed by BHP's board, but the news does not indicate any changes in this regard at the moment.
This news serves as a reminder of the ongoing challenges faced by the mining industry, and the need for companies to adapt and evolve in order to remain competitive. As part of the restructuring, the Saraji South coal mine will be shut down in November by BHP. The industry will be watching closely to see how BHP navigates these changes and what impact they may have on the future of the mining sector.
