The ripple from BHP Billiton's decision to shelve more than $20 billion of Pilbara expansion projects has become a wave, with one of the global mining giant's main WA engineering contractors moving to slash 500 jobs.
Although the companies went to ground yesterday, industry sources told WestBusiness that the FAST joint venture - between Sinclair Knight Merz and US-based Fluor - is axing more than a third of its once 1400-strong workforce.
Most of the workers are said to be draftsmen or contract engineers no longer required after BHP's decision last month to park its expansion plans, including the $20 billion Port Hedland outer harbour.
The FAST joint venture has handled much of BHP's engineering, procurement and construction management work in the Pilbara in recent years.
It comes as Fortescue Metals Group announced up to 600 job losses yesterday as it battled to overcome a debt-induced cash squeeze caused by plunging iron ore prices
However, BHP's main rival Rio Tinto has so far avoided the carnage sweeping the sector and the head of its Pilbara iron ore operations, Greg Lilleyman, said yesterday Rio was pressing ahead with its ambitious spending plans.
"We're currently midway through installing a further 60 per cent increase to our capacity to take our business to an annual throughput of 353 million tonnes a year," he told the Association of Mining and Exploration Companies conference yesterday.
"If and when we do get it right, and it's far easier said than done, as many of our peers are now discovering, we'll reach that target in 2015.
"Fundamentally we still do believe in the long-term soundness of the China story."
Mr Lilleyman said the shakeout could be a positive for existing low-cost producers such as Rio, further entrenching their positions.
"This can only be positive for the medium-term supply and demand balance, and therefore prices and returns on Rio Tinto's industry-leading projects," he said.
Calibre Group and Worley Parsons are among other contractors affected by BHP's decision to instead focus on milking existing operations, including squeezing more capacity out of Port Hedland's inner harbour.SKM said it was a matter for the FAST joint venture, which referred the matter to BHP. BHP declined to comment.
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