What: Shares in engineering and construction services provider Downer EDI Limited (ASX: DOW) have plunged around 12% today after the $2 billion contractor revealed that mining giant BHP Billiton Limited (ASX: BHP) has terminated its "overburden removal contract at the Goonyella Riverside mine in Queensland."
So what: The announcement will lead to the loss of 427 jobs and impact work-in-hand for Downer to the tune of $360 million. While Downer stated that it is entitled to compensation for early termination, it's still likely that there will be negative repercussions on earnings for the group.
Now what: Just as the weak iron ore price is affecting BHP, Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG), the weak coal price is affecting coal mining operations including BHP's Goonyella Riverside mine. Miners are being forced to reset their cost bases and reign in spending to prepare for leaner times ahead, this trend is set to continue and it's playing havoc with mining service businesses.