South Australia’s unemployment rate could reach 9 per cent in the next six months

South Australia’s unemployment rate could reach 9 per cent in the next six months, an economist has warned, after BHP Billiton announced it would axe about 380 jobs in the state.

The mining giant has announced it will cut almost one tenth of its workforce at its Olympic Dam mine in outback South Australia, in what it calls “operational changes”.

The cuts, flagged last week, came only days after Prime Minister Tony Abbott guaranteed jobs to build the Navy’s frigates in Adelaide.

BHP’s cuts follow the company’s announcement of 90 redundancies at Olympic Dam earlier this year and the shedding of 140 SA staff members.

The Australian Workers Union (AWU) has been told 143 technicians, 137 scientists and engineers and 27 supervisors were likely to go.

University of Adelaide Associate Professor John Spoehr said the company’s decision was a blow for the state.

“This is really hitting us hard on the back of other job losses and a very high unemployment rate that we have here in South Australia,” Associate Professor Spoehr said.

“When you add together the BHP jobs, the Alinta jobs and Santos jobs — the minerals and energy sector is doing it very hard at the moment, so this will be reflected in future unemployment numbers and I expect that will we see the unemployment number creep up to 9 per cent over the next six months.

“There’s no doubt that the losses from BHP Billiton take some of the shine off the recent frigate announcement and the investment in shipbuilding over the next few years so that’s very disappointing.

“So we had great hopes of course that the minerals sector in South Australia would expand significantly but now what we’re seeing is the opposite occur.”

Associate Professor John Spoehr said while the Federal Government’s announcement about frigates recognised defence jobs were important “they are only part of the solution”.

He said major infrastructure projects and spending needed to be brought forward to create employment.

South Australia’s unemployment rate dropped to 7.9 per cent for July from 8.2 per cent, but remains the highest in the country by some margin, ahead of Tasmania’s 6.7 per cent.

Global challenges lead to job cuts

In a statement on Sunday, Olympic Dam asset president Jacqui McGill said BHP’s cuts were part of an “ongoing review” of Olympic Dam operations in response to “global challenges” in the resources sector.

She said the mine needed to be transformed into a “sustainable operation that can contribute to the South Australian economy for many years to come”.

“[It] is not a reflection of any policy settings in South Australia,” Ms McGill said.

Acting Treasurer Jack Snelling on Monday demanded BHP Billiton outline its plans for the future of the Olympic Dam mine site.

Mr Snelling said the miner had not been upfront about its plans, including for a massive expansion.

“South Australian people have bent over backwards to encourage BHP’s investment into the state over the last number of years. [I] really think it’s time time BHP levelled with South Australia about their future intentions,” Mr Snelling said.

The state’s Chamber of Mines and Energy remains hopeful the move will not jeopardise future expansion plans at the site.

BHP mothballed its proposed expansion of the mine in 2012.

Roxby Downs Council administrator Bill Boehm told 891 ABC Adelaide he thought the job losses would affect a mixture of local people, fly-in fly-out and drive-in drive-out workers.

“The community up here were well aware, we are in a mining town and things do change,” Mr Boehm said.

“The town is a pretty resilient town and difficult though it is … there is a bright short-term, long-term future.”

He said the town had been set up for the mine and despite the cuts the community was being pro-active as local residents had businesses, children at school and services needed to be delivered.

Fears unemployment will reach double digits

Chamber of Mines and Energy chief executive Jason Kuchel said the company’s decision to reduce its workforce could make it easier to revive that plan.

“It’s often times like this where companies can recalibrate and improve their unit costs that enables them to actually respond more quickly when market conditions do improve and that actually bodes well for any future expansion plan,” he said.

AWU acting state secretary Peter Lamps said workers were anxious about their futures and the union wanted an assurance that workers’ safety would not be compromised.

He said some managerial positions would also being cut.

State Opposition Leader Steven Marshall accused the State Government of not having a plan to tackle the unemployment rate.

“I fear we are heading for double-digit unemployment figures in South Australia,” told 891 ABC Adelaide’s breakfast program.

He called for the Government to implement tax cuts to stamp duty to provide businesses tax relief for property transactions.

“We need urgent action to restore business confidence and stimulate businesses to create jobs in our economy,” Mr Marshall said.