Mining group Rio Tinto has announced that it will cut 14,000 jobs in the face of falling mineral prices and a slowdown in world demand. Last month, competitor BHP Billiton decided not to buy the group due to worsening economic conditions.
AFP - Anglo-Australian mining giant Rio Tinto will slash thousands of jobs globally to cut its debt by 10 billion US dollars as it battles falling mineral prices and a worldwide slowdown, it said Wednesday.
The company said it would cut 8,500 contractor and 5,500 employee roles as it moves to reduce its debt by the end of 2009 to counter the rapidity and severity of the global financial crisis.
"Given the difficult and uncertain economic conditions, and the unprecedented rate of deterioration of our markets, our imperative is to maximise cash generation and pay down debt," chief executive Tom Albanese said.
"We will minimise our operating and capital costs to appropriately low levels until we see credible and meaningful signs of a recovery in our markets, but will retain our strategic growth options," he said in a statement.
"By taking these tough decisions now we will be well positioned when the recovery comes."
The global miner, which had been the object of a hostile takeover bid by BHP Billiton until the rival walked away from the deal last month, said it will reduce its net capital expenditure guidance for 2009 from 9 to 4 billion US dollars.
"There will be impacts on projects across the board and stakeholder engagements are currently underway," the company said in a statement.
"Some projects will be cancelled and others deferred until markets recover."
The group will also reduce controllable operating costs by at least 2.5 billion US dollars per annum in 2010 and expand the scope of assets targeted for divestment, it said.
The world's biggest miner BHP Billiton walked away from its long-running campaign for Rio in late November, blaming the deepening financial crisis and falling commodity prices and citing Rio's debt levels as one concern.
At the time, Rio chairman Paul Skinner downplayed concerns about the debt, much of which relates to the company's 38 billion US dollar acquisition of Canadian aluminium producer Alcan.
"We are comfortable with our financial position, we are confident that our debt position is manageable," he said at the time.
Rio said it remained confident that the industrialisation of developing economies would continue to drive demand for metals and minerals in future years.
"The purpose of these measures announced today is to ensure that the Group is well positioned to exploit this underlying trend when the global economy recovers," it said.
Date created : 2008-12-10