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Source: Reuters -
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Debt-laden mining giant Rio Tinto is axing 14,000 staff and contractor jobs worldwide because of the unprecedented speed and severity of the economic downturn.
The move to end 5,500 of its 97,000 employee roles and 8,500 of
its 15,000 contractor jobs comes just over a fortnight after BHP
Billiton aborted a hostile $A100 billion bid for Rio Tinto, partly
because of its massive debt.
Analysts and ratings agencies have also slammed the company for the
debt - currently sitting at about $US41 billion - as the global
miner's share price has plummeted from $A63.90 just before BHP
Billiton walked away, to $A37.40 on Wednesday.
Rio Tinto is a joint owner of the Tiwai Point aluminium smelter near Bluff and nearly 800 workers there will be informed over the next few days whether they will keep their jobs.
The smelter's general manager is being briefed on the situation on Thursday.
Rio Tinto chief executive Tom Albanese says the staff cuts will
save the company $US1.2 billion a year.
"Given the difficult and uncertain economic conditions, and the
unprecedented rate of deterioration of our markets, our imperative
is to maximize cash generation and pay down debt," Albanese said on
Wednesday.
"By taking these tough decisions now we will be well positioned
when the recovery comes."
Rio Tinto, one of the world's largest miners, has 17,000 employees
and several thousand contractors in Australia at any one time.
Albanese would not tell journalists how many Australian jobs
would go, only that stakeholders and employees would be told
first.
"It's important for us to have those stakeholder discussions and
give those appropriate care and appropriate respect," he
said.
Rio Tinto will also consolidate its offices around the world but
headquarters in major countries, such as Australia, will not be
affected.
The company is also cutting costs and expenditure, putting new
assets up for sale and holding its dividend at 2007 levels to pay
down $US10 billion in debt by the end of 2009.
The company's plan to reduce overall operating expenditure,
including the job cuts, should save it at least $A2.5 billion for
the year in 2010.
Rio Tinto is counting on the further industrialisation of China and
India to support higher levels of demand for metals and minerals in
the future.
It expects to be in a prime position to make the most of a
recovery.
