Rio Tinto Weighs Job Cuts, Staff Relocation to Reduce Costs
Stock Chart for Rio Tinto PLC (RIO)
Rio Tinto Group (RIO), the world’s third- largest mining company, is conducting an organizational review that may lead to job cuts and staff relocation to reduce costs.
The London-based company started the global review last year to address “escalating costs across the organization,” David Luff, a Melbourne-based company spokesman, said in an e- mail today. There will be recommendations made “for sustainable improvements to our operating model and structure that will best support our vision to be the sector leader.”
As many as 250 employees in Melbourne and about 20 in Sydney may lose their jobs or be relocated to Brisbane or Perth when the review is concluded in about four weeks, the Australian Financial Review newspaper reported today, citing an e-mail from the Australian unit Managing Director David Peever to employees.
Rio Tinto is joining rival BHP Billiton Ltd. (BHP) in rationing spending after commodity prices slumped and global growth slowed. Chief Executive Officer Tom Albanese said last month the company will tackle rising costs at its Australian operations while taking a phased approach to mine expansions.
The company said in October it wants to divest or shut down 13 aluminum assets that include smelters and alumina plants from Australia to the U.S. Prices of aluminum, which accounted for 18 percent of Rio Tinto’s revenue in 2011, have dropped by about a fifth in the past year on the London Metal Exchange, according to data compiled by Bloomberg.
Credit Suisse Group AG and Deutsche Bank AG reduced forecasts for China’s economic growth this year as weakness in exports and investment drag on the world’s biggest buyer of metals.
Credit Suisse cut its estimate to 7.7 percent from 8 percent on June 14, while Deutsche Bank lowered its forecast to 7.9 percent from 8.2 percent. The predictions indicate the weakest growth since 1999 and compare with a 9.2 percent expansion last year.
Rio Tinto, with more than $33 billion of major projects under way, in April pulled out of talks for a potential coal port expansion in Australia’s Queensland state, citing uncertainty in “global economic markets.”
Norsk Hydro ASA (NHY), Europe’s third-largest aluminum producer, this month said it will close its Kurri Kurri smelter in Australia as industry overcapacity and weakening demand curb prices, resulting in the loss of more than 300 jobs.
Rio’s organizational review may also include moving its offices in Melbourne and Sydney to less costly buildings, according to the AFR. The company employs about 20,000 people in Australia, said Luff, declining to comment further.
Rio Tinto shares rose 0.4 percent to A$54.5 in Sydney trading yesterday. The stock has fallen 30 percent in the past year, compared with a 9.4 percent drop in the benchmark S&P/ASX 200 Index.
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