First, BHP Billiton warned that it was slashing costs due to a weak outlook for the coal market – now it has explained how it is doing it.
Closer monitoring of the performance of staff will be central to lifting productivity.
The resources giant’s coal worker crews are reporting more often to management, allowing early intervention with issues and analysis of their performance, analysts were told during a Bowen Basin mine site tour.
The initiatives include using data more often to analyse crews’ coal haulage and mining performance and more intensive “planned work”, with an aim to adhere to 80 per cent of the plan each day.
“Effective employee engagement and a performance based culture will drive greater productivity and increase returns from installed infrastructure,” the analysts were told in a presentation on Thursday.
The pressure is on the coking coal business, which posted a $US101 million ($A105.36 million) earnings loss in the first half of the financial year.
It employees 10,000 people in central Queensland alone but there have also been large jobs cuts in the last year.
It is one of BHP’s four pillars, along with iron ore, petroleum and copper.
BHP says the new regime is working and it has cut $US800 million in costs out of coal following reviews this year.
Its metallurgical mines were now cash positive, profitable and operating at full capacity, it said.
It has also identified bottlenecking that has caused production constraints in Queensland and high overhead and contractor costs as hurdles it has to jump to lift productivity.
The resources giant has 797 new, larger trucks in place to haul more coal that it plans to use for longer hours.
“We will displace excess contractor volumes and renegotiate rates for remaining volumes,” the group said.
That will bring more misery to the highly exposed mining services companies such as Transfield and WorleyParsons that have watched profit forecasts and their share price plunge in recent weeks.
BHP’s new chief executive Andrew McKenzie recently outlined plans to cut capital spending by a fifth to $US18 billion from $US22 billion.
BHP said it planned to mine at the lowest cost in the right areas of the Bowen Basin, which was the best coal basin in the world.
BHP operates seven mines in the Bowen Basin in its joint venture with Mitsubishi.
Its shares were 52 cents, or 1.49 per cent, down at $34.35.
