Prices Under Pressure, Costs Rising! BHP (BHP.US) Plans to Restructure Its Australian Iron Ore Business, Layoffs May Further Expand

According to information from Zhihui Finance APP, as part of a larger cost-cutting initiative, BHP (BHP.US) is planning to restructure its Australian iron ore business. This move aims to help the world's largest mining company cope with rising costs and the pressure from weakening prices of iron ore, a key raw material for steel production.

According to sources familiar with the matter, since Brandon Craig took over as CEO in July this year, BHP has cut 300 onsite positions within its Australian iron ore business. The company is expected to further reduce headcount, with most layoffs concentrated in white-collar roles. Currently, BHP's Western Australia iron ore division employs over 16,000 staff members and contractors.

Sources say that although the specific details are still being finalized, BHP's Australian iron ore business is expected to simplify its management structure through this reform and to integrate more support functions directly into the mining assets they serve, rather than keeping these functions in separate departments. They added, for example, that some technology-related work will be removed from the central management structure.

Sources also said that this adjustment builds on reforms that began under former CEO Mike Henry, and its ultimate impact will extend beyond the iron ore business, as BHP is reviewing costs in other segments of its portfolio. They added that other divisions could also face staff reductions.

Since last year, almost all major companies in the mining sector have been seeking to streamline operations and improve production efficiency, as once-lucrative profit margins have come under pressure. Rio Tinto Group (RIO.US) CEO Simon Trott has also made simplifying the company structure a priority, by merging overlapping roles, cutting management layers, and reducing bureaucracy, creating a leaner business focused on iron ore and copper.

More than twenty years ago, the sharp increase in demand for raw materials for steel production fundamentally transformed the trajectory of mining companies such as BHP. Thanks to its large-scale, low-cost mines in Australia, BHP grew into a global mining giant. However, now, as related demand cools and costs continue to rise, mining giants like BHP are facing new challenges.

Nevertheless, BHP states that it remains the lowest-cost major iron ore producer in the Pilbara region. In the last financial year, its mining costs were about $16.40 per ton, while the benchmark iron ore futures price was close to $90 per ton. By comparison, Rio Tinto’s Pilbara division’s cash cost for the first half of 2026 is about $25 per ton.