Rio Tinto to cut more jobs; aims to save $5 bn
06 May 2013
Global mining giant Rio Tinto Plc said yesterday that the company would shed more jobs in Australia as part of its plan to cut costs and save $5 billion over two years.
In an interview with Financial Review Sunday television programme, ahead of the company's annual general meeting in Sydney on Thursday, the company's chief executive Sam Walsh said, ''There will be reductions.
This is not easy. This is a process that is very very tough, but we need to get on top of our costs."
Walsh did not specify the number of job cuts. The company last year slashed the headcounts at its Sydney and Melbourne offices and most recently decided to reduce the strength of its global headquarters in London to half.
"We don't have targets for reductions in people. We do have targets for reduction in costs and we're working thorough that and addressing that business by business." Walsh said.
''We need to have a business that will be competitive, and when I look at both our energy and aluminium businesses they are going through very tough times,'' he further stated.
For the year 2012, Rio Tinto reported a net loss of $3 billion due to slump in commodity prices and $14.4-billion write-downs compared to a $5.8-billion profit in 2011 (See: Rio Tinto to cut costs by $5 bn after posting first annual loss of $2.9 bn).
The miner plans to sell a significant number of its non-core assets. Walsh said that he had met with the company's largest shareholders on the matter.
''They have all got a piece of advice for us. Of course one wants to listen to shareholders. But this is about value; this is about ensuring that I do deliver value to shareholders. It is not about a fire sale,'' he said.
Spot iron ore prices are at around $128 a tonne, up from the three year low of $99 a tonne in September 2012, but lower than the March high of $154 a tonne.
Walsh expects improved demand for iron ore in China in the light of the government's measures to stimulate growth.
"First quarter we saw a dip in China. We've seen increased commitment to infrastructure and an easing of credit and we expect that will flow through to steel production and iron ore demand," he said.
But Rio, being the world's lowest-cost iron ore producer was "doing okay," he said.