BHP Billiton edges closer to switching to owner-operated model

BHP Billiton has announced that it will relieve of duty the last contractor working on its Pilbara iron ore mines, thus continuing the trend which saw mining companies manage their own mines instead of hiring external contractors.

According to the media release by BHP, the company is looking to finalize its owner-operator transition in Pilbara with the last contractor run site Orebody 18 by June, ending nearly seven years of work on the site by mining services company Macmahon.

BHP iron ore president Jimmy Wilson said the company was pleased with the job done by Macmahon and that the two companies would work together to ensure a “smooth transition”. He said that the move was in line with the company’s goal to move the Western Australia Iron Ore business to a 100% owner-operated model.

“We are committed to the safe, effective and efficient transfer of the Orebody 18 operation to BHP Billiton and we will work closely with Macmahon to ensure this happens,” he said.

“Excess trucks and shovels made available due to improved productivity at our other mining operations will be used at Orebody 18, resulting in no additional truck and shovel purchases required to operate the site.

According to the article on the Sydney Morning Herald, part of the incentive to adopt the owner-operated model is to lower costs by removing the profit margin that contractors charge, but many miners also believe they are more in control of their safety reputations when they manage their own mines.

Over the past Fortescue has taken control of its mines in the Pilbara following the growing concerns over the safety record of one of its contractors.

BHP Billiton began the move to owner-operation in 2011 with the acquisition of HWE Mining subsidiaries and followed with the transition of the Yarrie operation to owner-operator in 2013.

The company will suspend operations at one of its smallest mines in the Pilbata called Yarrie as part of its move to fully control Orebody 18.

“We will redeploy Yarrie employees to our Jimblebar operation, which will manage Orebody 18, and other areas of the business wherever possible,” said Mr Wilson.