SYDNEY - BHP BILLITON Ltd/Plc will cut some 6 per cent of its workforce, and close its giant Ravensthorpe nickel mine in Australia, joining smaller rivals in downsizing to combat sinking prices of metals.

Conceding BHP 'got it wrong on Ravensthorpe', BHP Chief Financial Officer Alex Vanselow said the closure would lead to $1.6 billion (S$2.4 billion) in impairment charges in fiscal 2009, taking into account a reduction in activity at its nearby Mount Keith nickel mine.

Mr Vanselow warned on Wednesday more mines could be closed given uncertainty in commodity markets, with the Australian metallurgical coal mines already slated to reduce output 10 to 15 per cent.

'These are very serious types of decisions and we don't take them lightly, but at the end they are necessary and they are the correct decisions,' Mr Vanselow told a news conference.

Until now BHP has set itself apart from other miners by maintaining production and just last month said sales volumes were holding up despite the global downturn.

BHP said it is cutting some 6,000 jobs in total.

Rival Rio Tinto is in the process of eliminating 14,000 workers, Brazil's Vale has cut 1,300 jobs and put 5,500 workers on paid leave and other miners have also warned jobs were at risk.

'Ravensthorpe was always going to be relatively high cost, and it has been a difficult operation from day one,' said Mr Tim Schroeders, a portfolio manager at Pengaga Capital.

Besides some 2,100 jobs cuts in Austraian nickel mining another 4,000 jobs out of the 101,000 strong global workforce will go, Mr Vanselow said.

Mr Vanselow estimated the total job cuts will cost $500 million.

With industrial activity worldwide slowing, analysts doubted the cuts to nickel output would be enough to turn prices around.

'The decision to suspend Ravensthorpe really reflects the weakness in the nickel market, which is probably one of the weakest in all commodities,' said Gerard Burg, commodities analyst at National Australia Bank.

'I don't think the cuts will be enough to bring a rebound in nickel prices.'

Nickel , a key ingredient in stainless steel, has seen its prices plunge about 80 per cent to $11,200 a tonne from $51,650 a tonne in May 2007.

Rivals to cut back
Rio Tinto Ltd last week reported an 18 per cent decline in iron ore production for its fourth quarter and said earnings from its aluminium division would be hurt by falling prices.

Rio has since said it will cut another 6 per cent of aluminium output.

For now, BHP had no intention to curtail iron ore production in Australia, Mr Vanselow said.

Ravensthorpe, which started production in 2007 about nine months behind schedule, cost $2.2 billion to build and is one of the largest nickel-making facilities in the world.

Since starting, world nickel prices have plummeted, pressuring BHP and other miners on costs and prompting predictions that mines will decrease rather than increase output.

Mr Vanselow said BHP will reduce mining at the Mount Keith mine but would maintain nickel concentrate output there.

For the second quarter, BHP's production of iron ore rose 5 per cent over the same quarter a year earlier, while oil output rose 30 per cent.

Output of aluminium fell 8 per cent and copper 11 per cent. -- THOMSON REUTERS