BHP takes axe to 6000 jobs as demand from China plunges

London-listed mining giant BHP Billiton is following rival Rio Tinto with a big round of job cuts — 6000 — as demand for resources stalls.

It is also expected to take a charge of up to $1.7 billion (£1.2 billion) to cover the job cuts and the closure of Ravensthorpe nickel mine in Western Australia.

Chief financial officer Alex Vanselow said the future for metals demand, particularly in China, remains uncertain and BHP would continue to review all its operations.

Mining companies have been caught out by the unexpectedly rapid downturn in Chinese demand that has been waning since the Olympics in Beijing. Rio Tinto, Anglo American and Mitsui Mining & Smelting have been reducing output and slashing jobs.

"What we are seeing today is really unprecedented in terms of the economic circumstances," Vanselow said. "For the medium term, there will continue to be uncertainty and we need to be aligned with that."

BHP's decision "is a sober reminder of the unwinding of the mining boom caused by the global financial crisis, and in particular the slowing of the economy in China", Australia's chief finance minister Wayne Swan said in Sydney.

BHP employs 101,000 people round the world. The axe will fall hardest in Australia but with jobs also being lost in the US and Chile.

In an earlier production report, BHP said production of coking coal, used to make steel, increased 5% in the second quarter to 10.2 million tons but it expects demand to be weaker during this half.

BHP's iron ore output for the three months to December rose 5% from a year ago to 29.4 million tons and it aims to produce 130 million tons this financial year, up 17% on the previous year.

Rival Rio is cutting output by 10% from its ore mines in Western Australia, slashing 14,000 jobs and $5 billion in spending. It has also curbed coking coal output by 15%.