The prospect of job cuts raises doubts about the strength of Australia's mining boom, which has hinged on China importing hundreds of millions of tonnes of iron ore, coal, copper and other minerals year-in and year-out for most of the past decade.

In a 50-50 partnership with Japan's Mitsubishi (8058.T), BHP operates a half-dozen coal mines in Queensland's Bowen Basin, yielding mostly metallurgical coal used in steel making. At peak output, they can supply up to a fifth of the world's traded coal.

BHP earlier this year closed one of the mines outright, citing poor profit margins. The company's closest rival Rio Tinto (RIO.AX) (RIO.L) in July said it was cutting an unspecified number of jobs at one of its Australian coal mines as coal prices slid.

"Against a backdrop of increasing costs and falling commodity prices, we continue to focus on reducing our overheads and operating costs," BHP said in an emailed statement.

"We don't intend to provide any detail about specific adjustments, but clearly there may be some impact on jobs in some areas," it added, responding to a question about reports of job losses at its coal mines.

Softening demand growth in China, where the economy is expanding at its slowest pace in more than three years, has hammered prices of coal, iron ore and other commodities to their lowest levels in years, bruising the profits of miners such as BHP, Brazil's Vale SA (VALE5.SA), Xstrata (XTA.L) and AngloAmerican (AAL.L).

BHP has abandoned an $80 billion five-year spending plan announced in 2011 when commodities markets were still firing, and has since signaled it would review its project pipeline and focus on cutting costs.

Until recently, growing demand for commodities was driving a hiring spree by miners. High wages and tantalizing benefits, such as condominium-style mining camps and two-week-on 10-days-off rosters that could include flights to exotic places like Bali became commonplace.

"The sector has gone to accounting for 9 percent of overall GDP from 3 percent in the past," said Ric Deverell, global head of commodities research at Credit Suisse.

But warning signs are beginning to emerge that the best may be over.

CHINESE STEEL PRICES

ANZ Bank last week downgraded its commodity price forecasts by an average 4 percent in 2012 and 3.4 percent for 2013. The biggest revisions have been made to iron ore and coal, which the bank said were being heavily impacted by the slowdown in China's demand growth and falling steel prices.

BHP employs about 10,000 at its Queensland coal mines run with Mitsubishi, including 3,500 unionized staff already engaged in an 18th month dispute over conditions and job protection.

Union representatives could not immediately be reached for comment, but one industry source estimated about 100 jobs could go at BHP, including staff employed by independent contractors.

The drop in global coal prices, high costs, and a strong Australian dollar have prompted other coal producers to trim output and cut contract workforce.

Thermal coal producer Xstrata said this week it had cut some of its contractors at its Australian coal operations "given current market conditions."

Prices for Australian thermal coal, which BHP also mines, have dropped about 18 percent since the beginning of the year to just under $93 per tonne, but have recovered from two-year lows under $90 per tonne seen in June of this year.

Spot metallurgical coal prices have dropped to just over $170 per tonne, down over 20 percent from the beginning of July.

"Coking coal prices are now more reflective of demand dynamics rather than supply, and the demand dynamics are quite soft and that's showing up in the very weak steel prices we are seeing in China," Mark Pervan, global head of commodity strategy at ANZ Research in Melbourne, said.

China's steel prices, hovering near record lows, are expected to remain weak in the next few months due to a supply glut that will offset an expected increase in demand, the China Iron & Steel Association (CISA) said.

BHP SET FOR SLUMP IN EARNINGS

Australian miners are not alone in cutting output. China, which in addition to being the world's top consumer of coal is also the world's top producer, said on Wednesday it would cut its coal output targets in its three top producing regions by as much as 7 percent to ease a glut in supplies.

Given this backdrop, analysts expect BHP to report its first drop in annual profits since the global financial crisis when it releases its financial results on August 22.

BHP is expected to post attributable profit excluding exceptional items of $16.9 billion, a consensus of forecasts compiled by the firm shows, from $21.7 billion a year ago.

(Additional reporting by Rebekah Kebede in PERTH; Editing by Ed Davies)

• A Permanent Economic Emergency