He said BHP Billiton was suffering a “lag” effect of the commodity boom, which has lead to costs for labour and contractors contributing to $US878 million extra in costs in the last financial year.
“For us, there are two aspects that we always emphasise when we talk about total labour productivity, or total cost per unit,” Kloppers said.
“One is what does it cost for a unit of labour [and] the second item is, what are you able to produce out of the unit of labour?
“So what we have seen, particularly on the capital side in Australia, is that we have had negative impacts, or the industry has had negative impacts, on both those elements.
“So labour has become more expensive and unbalanced. It has become less efficient.
“Again, that’s why the company is on the record as saying an ongoing focus on productivity, which is the combination of the unit cost and the unit efficiency, is a very important thing.”
Earlier this month the Single Bargaining Unit – made up of the Construction Forestry Mining Energy Union, the Australian Manufacturing Workers Union and the Communications, Electrical and Plumbing Union – filed its intent to execute work stoppages in excess of 36 hours at six BHP Mitsubishi Alliance (BMA)minesites in central Queensland.
Unions said the unit is frustrated with negotiations with BMA as it seeks changes to job contracts in matters relating to job security, recruitment, use of contractors, training and development.
A spokesperson for BHP Billiton told ILN: "BMA is continuing to meet and negotiate with the unions and believes good progress is being made.
"Both parties have acknowledged BMA’s intention to have negotiations completed so as to allow employees to vote on a proposed agreement in early September.
"This is consistent with feedback that we are getting from employees who are expressing frustration about the time negotiations are taking and about the impacts of ongoing industrial action.
"BMA is continuing to do all it can to avoid further disruption and to ensure negotiations are completed as quickly as possible."
According to BHP Billiton’s profit statement for the 2011 financial year, costs lowered its underlying earnings before interest and tax by $US1.2 billion, excluding the impact of a weaker US dollar, inflation and an increase in non-cash items.
Higher fuel and energy prices – together with increased maintenance, labour and contractor costs – accounted for the majority of the impact and reduced underlying EBIT by $878 million.
“BHP Billiton has regularly highlighted its belief that costs tend to lag the commodity price cycle as consumable, labour and contractor costs are broadly correlated with the mining industry’s level of activity,” it said.
“In the current environment of elevated commodity prices, tight labour and raw material markets are presenting a challenge for all operators.”
