Mining Giant Rio Tinto Cutting 14,000 Jobs
The world economic slump hit Rio Tinto Group, the giant mining concern that operates from London and Australia and has numerous operations in North America. Rio Tinto today said it will eliminate 8,500 contract workers' jobs and 5,500 employees' jobs, for a total cut of 14,000 positions, as it reduces net capital expenditure in 2009 from more than $9 billion to $4 billion.
The company has about $41 billion in debt on its books and $14.9 billion in estimated pension liabilities as of Sept. 30, 2008, with pension assets of $13.3 billion on hand, according to today's announcement. Only about 10 percent of the pension liabilities are in the United States, it said. The company's major products from operations in North America and worldwide include aluminum, copper, diamonds, gold, industrial minerals, and iron ore. On Nov. 25, one of the world's largest mining companies, BHP Billiton, abandoned a hostile bid to acquire Rio Tinto for $66 billion, and analysts today said it is no surprise that Rio Tinto is moving now to trim its debt.
"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. We have undertaken a thorough review of all our operations and are executing a range of actions," Tom Albanese, Rio Tinto's chief executive, said in the financial release. "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. We will expand further the scope of assets we are targeting for divestment. By taking these tough decisions now, we will be well positioned when the recovery comes.
"Notwithstanding the current financial turmoil, we continue to enjoy a suite of key assets which operate in the lower half of the cost curve in their industries, and our suite of growth assets remains capable of re-activation as soon as market conditions justify."