Commodity prices just aren’t what they used to be.
UK mining company Rio Tinto has announced more cost-cutting initiatives for its iron ore division, which will involve reduction of scheduled maintenance task times, renegotiation of service contracts, and changes to staff pay.
According to Australian Mining, an internal document was leaked showing Rio Tinto iron ore chief executive Andrew Harding delineating a series of cost cutting requirements, including an immediate hiring freeze, which he stated was imminent to maintain business success.
The leaked document also said that superintendents for site operations will be subject to quarterly reviews.
“These will cover safety, cost and productivity performance, as well as commitments for the forthcoming quarter,” Harding said. “I do not intend that any of these actions, and the extra efforts required on safety, will compromise our objective of continuing to be the best iron ore company in the world.”
The areas said to require urgent attention include:
• Cost-outs and capital reductions that are significantly below the existing plan;
• The renegotiation of significant service and supply contracts;
• Reflecting market conditions for employees and labor related costs;
• The extension of an immediate hiring freeze and review of organizational structures;
• Revamping of the way we schedule maintenance - by intervals and task times;
• A significant reduction in warehouse and stockpile inventories.
Gary Wood, CFMEU’s mining and energy secretary, said he did not expect Rio Tinto’s plan to have a major impact on workers.
"You sort of wonder what's behind this," Wood said.
"Our initial thought is it's shareholder driven, letting them know they're reacting to the market, but when you look into it, it's really just about cost cutting and being prudent in their management style."
He added, "If [Rio Tinto] wants to increase their tonnage from 290 million to 360 million tons [of iron ore shipped a year], they're going to need labor.”