Anglo-Australian mining giant Rio Tinto will slash thousands of jobs globally to cut its debt by $10 billion as it battles falling mineral prices and a worldwide slowdown, it said Dec. 10.
The company said it would cut 8,500 contractor and 5,500 employee roles, as well as reduce spending and sell assets, to lower its debt by the end of 2009 to counter the speed and severity of the global financial crisis.
Rio, which employs 97,000 workers around the world including 17,000 in Australia and significant numbers in North and South America and Africa, did not specify where the job cuts, designed to produce annual cost savings of $1.2 billion, would be located.But it said there would be a consolidation of offices around the group, a rapid acceleration of out-sourcing of IT and procurement and a deferral of exploration and evaluation expenditure.
"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," chief executive Tom Albanese said. "We will minimize 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. "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 for 2009 from $9 to $4 billion.
"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 company, the world's third biggest miner, said it was confident that the industrialization of developing economies would continue to drive demand for metals and minerals in future years.
Copyright Agence France-Presse, 2008