BHP Billiton Acquires HWE Mining

BHP Billiton is to acquire HWE Mining from Leighton Holdings, allowing the mining giant to switch to an owner-operater model at its iron ore mining operations in the Pilbara region. The deal will see Leighton Holdings richer by $735 million. HWE Mining had provided close to 70% of operations on behalf of BHP Billiton on contractual basis.

Ian Ashby, president of BHP's iron-ore division said that while this move to an owner-operator model will remove a layer of complexity and costs from their business, the real focus of this proposed transaction is the work force. He felt that taking over the contractor’s business was a lower risk alternative to hiring their own employees in Western Australia.

The HWE Mining is the Leighton Holdings subsidiary which operates in the Area C, Yandi and Orebody 23/26 iron ore mining operations owned by BHP Billiton. The Melbourne based multi-national expects to close the purchase of the subsidiary by the fourth quarter subject to definitive agreements and regulatory approvals.

Ian Ashby wrote in an email that transitioning to owner operator in this way, rather than by replacing contractors through direct recruitment, is a lower risk strategy as it would be challenging to replace the highly skilled and long serving HWE employees in the current environment.

David Stewart the chief executive of Leighton Holdings said that the potential sale would recognise the creation of substantial value by Leighton since it purchased HWE Mining out of administration in 2006. He added that the proposed sale represented a positive result for both parties.

Joel Scanlon

Written by

Joel Scanlon

Joel emigrated to Australia in 1995 and worked for five years in the mining industry as an exploration geotechnician, using GIS mapping and CAD software. Upon moving to the North Coast of NSW, Australia Joel worked as a graphic designer for a leading consultancy firm. After that, he ran a successful business providing web services to businesses along the eastern seaboard of Australia. During this time, he developed and launched News-Medical.Net. Joel has been working with AZoNetwork since the company was founded in 2000.

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