BHP detonates an IR explosion

The closure of BHP Billiton-Mitsubishi Alliance's Norwich Park coal mine shows it is prepared to stare down the unions no matter how long its dispute lasts and almost regardless of cost.

BHP Billiton’s announcement today that the BMA alliance it has with Mitsubishi will close the Norwich Park coal mine in Queensland’s Bowen Basin could be seen, and no doubt will be seen by its unions, as provocative.

While BMA was insistent that the closure, which came after a seven-week review of the mine’s viability, was because the mine was losing money, the unions, in the midst of a bitter and protracted dispute with BMA, will inevitably interpret it as an escalation of hostilities.

BMA and its unions – the CFMEU, ETU and AMWU – have been at loggerheads for nearly a year and a half over a new enterprise agreement. Like a number of recent industrial relations disputes, the issues aren’t financial money but relate to things like rosters and scheduling and other matters that BMA consider the responsibilities of management.

It was always possible that Norwich Park would be closed. While BMA said the mine had been losing money for several months it has previously said it was cash negative and Marius Kloppers has made it clear that BHP won’t tolerate projects that aren’t cash positive within its portfolio.

Earlier this month BMA invoked force majeure clauses in contracts with the customers of its seven Bowen Basin mines, citing the heavy rains last month and the industrial dispute, which has involved strikes and rolling work bans, for its inability to guarantee contracted supplies. BHP is the world’s largest supplier of seaborne metallurgical coal, accounting for about 20 per cent of the global trade.

Norwich Park is the highest-cost mine within the BMA portfolio and BMA said it was the combination of last year’s floods, lower coal prices and higher costs that had undermined its viability – although it also said recent industrial action had also had an impact on production.

BMA will "now focus on implementing measures that would enable Norwich Park to operate as a sustainably profitable, low-cost mine," BMA Asset president Stephen Dumble said. Operations wouldn’t, however, re-start until viable solutions had been found.

That’s not good news for the 490 permanent workers and 910 contracts working at the mine, although BMA said it would try to maximise redeployment opportunities to its nearby Saraji mine.

The unions have been steadily escalating their industrial action and resisting attempts by BMA to conduct a secret ballot on a new enterprise agreement. The ballot was scheduled to be sent to its employees this Friday but has been postponed by BMA for a week after the CFMEU applied to Fair Work Australia on the basis that some of the employees hadn’t yet received the information packs giving details of the proposed agreement.

The declaration of force majeure for the first time in more than a decade and now the closure of Norwich Park represent an escalation of its own by BMA, which has made it very clear that it is prepared to stare down the unions no matter how long the dispute lasts and almost regardless of its cost – to BMA and its customers.

For BMA it is a matter of core principle – the right for management to manage – at stake while for the unions the dispute is about using the Fair Work Act to reassert themselves and reclaim ground lost during the Howard government years.