According to the union, people employed by BHP's Operations Services subsidiary are about $50,000 a year worse off than their directly employed counterparts, earning about $106,000 a year compared with the union-backed enterprise agreement paying $159,200.

Mount Arthur has had 50 people employed through Operations Services since December last year, and BHP says that number will soon double to 100, and likely increase beyond there.

BHP says Mount Arthur employs about 1500 people all up.

The CFMMEU says BHP set up the Operations Services division as "an in-house labour hire service in response to worker and community backlash against casual labour hire, creating a new supply of workers on lower rates than union-negotiated site agreements".

READ MORE: The Herald highlights the contract mining problem at Mount Arthur in 2015

BHP has a different explanation, saying Operations Services gives the company the cost benefits of contract mining and the productivity benefits and stability that come with direct employment.

It denied union claims that a fly-in-fly-out or FIFO model was being used at Mount Arthur but it confirmed that a number of its Operations Services crew were being put up in Muswellbrook hotels.

The two sides have been slogging it out in the Fair Work Commission, with the union saying it intervened after BHP applied to register two enterprise agreements - voted on by a few dozen non-union workers at the company's WA iron ore - for use at Mount Arthur and its Queensland coal mines.

Having kept its members and their communities informed of BHP's intentions, the union has decided to up the ante by screening advertisements on television and online from today - the first saying it cost BHP $2 to set up two shelf companies "used to employ a cut-price workforce" at its mines.

The CFMMEU's northern district mining and energy secretary, Peter Jordan, said the major campaign was necessary because BHP's practice was so deceptive.

"They should be giving Mount Arthur workers permanent jobs under the site agreement, not driving down pay and conditions to a new low standard," he said.

Mr Jordan said, unlike directly employed mine workers, those with Operations Services would not receive accident pay if injured.

"The Hunter is a proud mining region where workers have always been able to live locally and go home to their families at the end of the day.

"Operations Services is purposely setting out to destroy that successful model by establishing FIFO-style rosters and accommodation

"Throw in the fact that these outsourced workers are actually being hired by a dodgy BHP-owned entity on cut-price wages and it's fair to say the Hunter is being scammed here.

"BHP have been aggressively converting good, permanent jobs at Mount Arthur into casual labour hire jobs for years.

"Now, they are sneakily pretending to fix the problem they created by outsourcing those jobs to their own subsidiary on even lower wages."

Responding, a BHP spokesperson said the company had "assembled a team of directly employed, permanent BHP workers on market competitive rates to deliver services at BHP facilities".

"These workers are permanent employees of BHP," the spokesperson said.

"They are not labour hire employees as the CFMMEU has falsely claimed."

BHP said all full-time "operator" and "maintainer" jobs in Operations Services "receive salaries in excess of $100,000, which is well above the level determined by the relevant industry awards".

"The union has been calling for more permanent jobs and less casual employment in the resources industry for a number of years," the spokesperson said.

"It is odd that they would now launch a campaign against the very thing they were calling for - more opportunities for permanent full time jobs which is exactly what these BHP Operational Services jobs provide."

Under the labour hire model that many companies including BHP had embraced, teams of "embedded" mine workers often stayed at one mine under various employers, simply "changing shirts" from one logo to another as different companies won and lost the work.

This does not appear to be the case with Operations Services, with BHP saying it had advertised widely to build its new workforce from scratch.

The union expects various labour hire firms, including the controversial Chandler Macleod, to be replaced as their contracts ran out.

Speaking after releasing last month's financial year profit of $US9.1 billion ($13.3 billion), BHP chief executive Andrew Mackenzie told analysts Operations Services had been "hugely successful".

"Already we see halving of safety rates and a 20 per cent reduction in costs or, if you like, a 25 per cent increase in productivity," Mr Mackenzie said.

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