By James Regan

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

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 percent.

"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," 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 Tim Schroeders, a portfolio manager at Pengaga Capital.

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

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 percent to $11,200 a tonne from $51,650 a tonne in May 2007.

RIVALS CUT BACK

Rio Tinto Ltd last week reported an 18 percent decline in iron ore production for its fourth quarter and said earnings from its aluminum division would be hurt by falling prices.

Rio has since said it will cut another 6 percent of aluminum output.

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

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 percent over the same quarter a year earlier, while oil output rose 30 percent.

Output of aluminum fell 8 percent and copper 11 percent.

(Editing by Anshuman Daga)