Rio Tinto to cut 1,500 jobs amidst price slump
27 March 2015
The continued slump in commodity prices has prompted global mining giant Rio Tinto to cut at least 1,500 jobs, including a substantial proportion of the positions in the company's London headquarters, Sky News reported yesterday.
It is learnt that the miner has informed staff that it was beginning consultations about the planned job cuts. The exact number of the job losses is not known, but according to some insiders, the overall figure across the company could be well above the 1,000 speculated in recent reports.
It is expected that the bulk of the job cuts will come from Western Australia, where the company's iron ore operations are concentrated.
''I realise that for some of you the changes I have outlined will be challenging and in some circumstances they will result in good people leaving our business,'' Rio Tinto chief executive Sam Walsh said last month in an internal memo.
It is expected that a separate communication to the UK staff may come out this week, although the company spokesperson declined to comment.
The miner, like its other peers BHP Billiton and Vale, has been axing jobs to cut costs to shield itself from the plunge in commodity prices, particularly iron ore, which provides the bulk of its earnings.
Iron ore prices have fallen to around $55 a tonne from $112 a year ago due to glut in supply and weak demand from China and other countries and according to analysts, the outlook is bleak.
The job cuts are expected to result in hundreds of millions of dollars in annual savings.
Rio Tinto chief executive Sam Walsh who took the reins in 2012, said last month that the company will restructure parts of its business to cut costs.
"These changes are part of our continuing business transformation to reduce costs, simplify and strengthen our company and deliver sustainable value for shareholders.''
Through its cost-cutting measures, Rio has reduced its cash costs in the December quarter to just under $17 a tonne, the lowest in the world.
Rio has made $4.8 billion in cost savings since 2012 across the group, and is targeting another $750 million this year.
"The scenario for 2015 and beyond reinforces the absolute need for us to maintain our position as the lowest-cost producer, particularly when compared with other Pilbara producers," Rio had said.
Meanwhile, yesterday quoting some sources, Reuters reported that Rio Tinto plans to cut over 50 positions in its mergers and acquisitions and business development as it battles against the price slump in commodities.
According to the sources, a review has revealed that various roles, particularly in senior positions, are redundant in central offices and various divisions.