An update to my recent post of the same name. It seems that the majority of analysts think that the drop in production in the Pilbara region will be a temporary issue. Let’s hope so anyway. I’ve been in contact with a mate who managed a contracting company on an iron ore site and he’s been redeployed elsewhere. That in itself is good news – no lost jobs there.
BHP seems to be finding ways of dropping production with minimal impact on its operations. (Correct me please if I’m wrong). I’ve read that they’re attempting to scale back by about 5%.
Meanwhile Rio Tinto has already taken steps to drop production by 10% by removing contract companies while maintaining their own staff. Apparently the entire Pilbara production is being shut down for two weeks over the Christmas period with staff being asked to take annual leave. I’ve talked to a couple of people effected by this and they’re a little nervous but comforted to know that they’re employed by the company and not contracted to them through Skilled or Workpac or some other labour hire firm. If things do turn south it’s going to be those people that are first to go.
It seems that the renegotiation of price is a major factor in the reduced demand from China. They’re stalling production now so they can get the ore next year at a much reduced rate. That makes a lot of sense and although it effects Australia’s revenue, at least it would indicate that things won’t be as bad as the doomsayers were predicting a month ago.
Filed under: Life On Site | Tagged: career, China, contractors, economy, job, money, production
It strikes me the major issue was the tumbling Aussie Dollar. If I know China like I know China the significant reduction in cost of money regardless of the fact they would not have hedged for this event means they will try and repudiate contracts in an attempt share in the exchange rate change.
It will get back to normal very quickly