Junior iron-ore producers say BHP-Rio deal could lead to job losses

JOHANNESBURG (miningweekly.com) - The proposal by diversified miners BHP Billiton and Rio Tinto to merge their iron-ore operations, could lead to significant job losses in Western Australia, North West Iron Ore Alliance (NWIOA) said on Monday, highlighting the importance of promoting the junior iron-ore sector. “There appears to be a strong view among analysts that the BHP-Rio joint venture (JV) could lead to significant job losses in Western Australia. This is supported by forecasts that the JV could generate savings for the pair of about $12-billion,” said NWIOA deputy chairperson Dr Justin Walawski. “If so, it highlights the importance of diversifying the industry, creating new employment and development opportunities and reducing dependence on a small number of large resource companies.” Walansi stated that the NWIOA alone could, once fully operational, provide direct employment opportunities for between 600 and 800 people, and two to three times that number again in indirect employment. He said the four members of the NWIOA – Atlas Iron, BC Iron, Brockman Resources and FerrAus – also had the potential to produce more than 50-million tons of iron-ore a year by 2013. This would generate about $200-million a year in royalties for the State. Rio Tinto announced the JV deal to consolidate its iron-ore operations with BHP Billiton’s on Friday, when it scrapped its proposed $19,-billion tie-up with China’s Chinalco. The deal will lead to the two suppliers, BHP-Rio and Brazil’s Vale, controlling about 70% of the global iron-ore market. Meanwhile, the NWIOA said it believed the Rio–BHP JV should result in additional capacity on railway lines for third parties, and that new port capacity be developed soon. “It is, therefore, crucial that a new rail haulage regime that is transparent, efficient and cost-effective be brought into existence for smaller iron-ore producers,” Walawski said. “The Pilbara Rail Access Interdepartmental Committee has been considering this matter since 2006, and I am sure the new State Government will seek the committee’s recommendations as soon as possible.” Walawski added that the Rio–BHP JV also meant it was “vital” that the NWIOA developed its Port Hedland inner harbour berths “as soon as possible”. “With the right environment through the agreement and approvals stages, the NWIOA’s two berths will be commissioned and exporting iron-ore in 2013. This is crucial infrastructure for diversification of the industry and fostering this State’s next generation of Western Australian iron-ore miners”.