BHP Billiton (BLT.L) has agreed to to acquire contract mining subsidiaries from Leighton Holdings in a deal worth $735 million (£448.8 million).

The Leighton Holdings HWE Mining subsidiaries provide contract mining services to its Western Australia Iron Ore operations.

The operations collectively account for almost 70 per cent of Western Australia Iron Ore's total material movement.

Ian Ashby, president of iron ore at BHP Billiton, said, 'While this move to an owner-operator model will remove a layer of complexity and costs from our business, the real focus of this proposed transaction is the work force.

'Transitioning to owner operator in this way, rather than by replacing contractors through direct recruitment, is a lower risk strategy as it would be challenging to replace the highly skilled and long serving HWE employees in the current environment.'

The acquisition is set to complete in the fourth quarter of 2011, subject to due diligence and regulatory approvals.

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