Perilya cuts over 400 jobs at Broken Hill mineArticle from:
August 21, 2008 10:00am
SLIDING metal prices are claiming more victims with 440 workers at the Broken Hill lead and zinc mine to be made redundant next month.
Miner Perilya said low metal prices had forced a production downgrade, and consequently, the job cuts.
"Regrettably, the lower production rate necessitates a reduction in our workforce from 760 to 320 employees,'' Perilya executive chairman Patrick O'Connor said.
This week smelter operator Nyrstar announced a review of its zinc smelting operations at Port Pirie.
Zinc prices have fallen 70 per cent over the past two years to about $US1600 per tonne.
Perth-based Perilya said there would be more downsizing at its corporate head office.
"The affected employees will be provided with their full entitlements and supported in the transition,'' Mr O'Connor said.
The company was mindful of the impact upon individuals, their families and the community, he added.
The review of the Broken Hill operations was flagged in Perilya's June quarterly report.
Under the revised operating plan for Broken Hill, ore production will reduce from 1.8 million tonnes to 0.95 million tonnes per annum - expected to produce 55,000 tonnes of contained zinc and 50,000 tonnes of contained lead.
"The resizing...is prudent, conserves cash and positions the operation for the future,'' Mr O'Connor said.
The company estimates the mine will be financially viable at current metal prices for at least the next 2 to 3 years.
Perilya also closed its hedge book, realising $60.3 million in cash to strengthen its weak balance sheet.
Of this, $20 million will be used to cover redundancy costs and $10 million would go in debt repayment.
For FY09, the company has forecast lower capital and development expenditure costs of $25 million, and down to $15 million in FY10.
The company is in talks with the Broken Hill Council and the NSW government to "ensure the continuity of operations in Broken Hill''.
Perilya reveals its annual results on Aug 29 next week.
More announcements are expected as the company evaluates expressions of interest for its Mount Oxide copper project in Queensland.
Another update on future capital management strategies is due in October.
At 1345 AEST, Perilya shares were trading up 4.4 per cent at
