BHP Billiton and Mitsubishi to cut 700 jobs at coal mines

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BHP Billiton and Mitsubishi plan to cut 700 jobs at a joint coal mining venture in Australia because of tough market conditions.

Both companies said they found the business was overstaffed following an operational review.

The job cuts account for about 7% of the joint venture's total workforce.

The joint venture, which includes seven coal mines and a coal terminal in Queensland, is the world's biggest exporter of coal used in steelmaking.

"The coal industry continues to face challenging market conditions and had to act to ensure the long-term viability of the business," the BHP Billiton-Mitsubishi Alliance (BMA) said in a statement.

Coking coal mines have been closed or seen production plummet after prices hit a six-year low because of global oversupply.

Coal prices currently trade at about $110 (£67) a tonne, but some analysts believe that may fall further as a result of weak demand from top buyer China.

"A slowdown in China's manufacturing marks low demand from an economy which Australia relies on heavily for commodity exports," Desmond Chua from CMC Markets said.

BHP has called its coal unit one of its "four pillars of growth" along with iron ore, copper and petroleum products.

However, the firm has been under pressure to lower operating costs because of a slump in iron ore and coal prices. Both raw materials are used in the production of steel.

Last week, it also announced plans to cut jobs at its Port Hedland iron ore mines in Australia.