BHP Billiton coal president Dean Dalla Valle said the move was “a further measure to ensure the long-term viability of the coal business”
In an ominous sign of things to come for BHP coal mines in Queensland and New South Wales, he also pointed to more cost cutting.
He said it was “a continuation of cost reduction and productivity enhancement measures” run for more than 18 months and which aimed to operate every mine in the black.
“Further measures to address wage and other costs are being undertaken at all mines in Queensland and NSW as we continue our detailed reviews … to ensure every operation remains operating cash positive,” Dalla Valle said.
One quarter of Queensland’s coal production is already being produced at a loss, according to the Queensland Resources Council data.
Some of these mines are only staying open because production is a more palatable option than closing operations that are locked into transport costs levied on a take-or-pay basis.
QRC CEO Michael Roche said that with one out of every 10 tonnes of coal produced in Queensland in the red to the tune of more than $14, some mines were at extreme risk of shutdown.
Downer employs 427 people dedicated to the operation of four pre-strip fleets at Goonyella Riverside.
It also reduced its workforce last year when BHP took 185 jobs at the mine in-house.
The contractor estimates that the early termination of the contract, which was due to be completed in June 2016, will have an impact on work-in-hand of approximately $360 million, with $160 million in the 2015 financial year and $200 million in FY2016.
Under the terms of the contract, Downer will be entitled to compensation for early termination.
Goonyella Riverside sits in the BHP Mitsubishi Alliance stable of coal mines, which has been ramping up production since concluding enterprise agreements with its workers and overcoming production problems associated with floods and cyclones.
Construction, Forestry, Mining and Energy Union vice-president Chris Brodsky told AAP that he doubted many workers would keep their jobs.
“I can't see Downer having any other work for them ... I could be wrong but work is pretty scarce out there at the moment,” he said.
“We worked with Downer over the last month to reduce costs and keep people employed but it still wasn't enough for BMA.”
