BHP said it was cutting six per cent of its workforce in total and reducing activity at its Mount Keith nickel mine.
"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 said.
Rival firm Rio Tinto is in the process of shedding 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 are at risk.
Fund managers said brokers were likely to cut their earnings forecasts for BHP, which had been expected to report a net profit around $14bn for the year to June 2009.
Neil Boyd-Clark, a managing partner at Fortis Investment Partners, said: "Clearly their balance sheet is in a respectable position, but they are not immune from the commodity price environment that we're seeing, and earnings are going to suffer."
Shares in the company plunged more than three per cent after the announcement, before recovering some ground to close about one per cent lower at $18.73.
Vanselow conceded that his company "got it wrong" on its Ravensthorpe mine, while financial analysts said BHP was doing the right thing by shutting down the mine in the face of weak nickel prices.
"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 Pengana Capital.
But with industrial activity worldwide slowing, analysts doubt the cuts to nickel output would be enough to raise prices.
Nickel, a key ingredient in stainless steel, has seen its prices plunge about 80 per cent to $11,200 a tonne from $51,650 in May 2007.