Thousands of WA jobs face axe in Rio cutback

Thousands of WA jobs are under threat after mining giant Rio Tinto last night blamed the “unprecedented” global economic meltdown for its drastic decision to slash 14,000 jobs worldwide and freeze its dividend. The job cuts, which are likely to be felt hard at Rio’s Pilbara iron ore operations, and plans for asset sales that could involve the Argyle diamond mine in the Kimberley and the HIsmelt metal plant at Kwinana, are part of a radical plan by Rio to improve its financial position amid the heavy slump in commodity prices. Stunned by the sudden fall in Chinese demand for metals such as iron ore, copper and aluminium, Rio has been forced to join the rest of the mining sector in abruptly axing projects, slashing jobs and reining in spending because the soaring profit targets it set only months ago are no longer attainable. Rio’s shock announcement comes just a month after Alcoa revealed it had shelved plans for a $2.2 billion expansion of its Wagerup alumina refinery in the South-West because of falling aluminium prices and amid a raft of delays and scale-backs elsewhere in the Australian mining industry. Rio chief executive Tom Albanese said last night the miner would more than halve its capital expenditure budget for next year to $US4 billion ($6 billion) while dividend payments over the next two years would be scaled back to 2007 levels. Mr Albanese refused to speculate on how many WA jobs might be cut or which of its operations in this State could be closed. The worldwide job cuts alone are forecast to save Rio $US1.2 billion a year in wages and will play a big role in the company’s bid to reduce its massive debt load by $US10 billion by the end of next year. Mr Albanese, who was paid $13.5 million in the past year and insisted last night he was the right man to lead Rio’s restructuring, said details of the job cuts would be announced early next year. But he warned that “we are moving quite quickly”. “It’s safe to assume these (job cuts) are distributed globally and until we have the opportunity to meet with relevant stakeholders, including in WA and other parts of Australia, it would be inappropriate for us to be more specific at this time,” he said. “The decisions we have made are tough but they reflect the determination we have to ensure that we will be well positioned when the (global economic) recovery comes. “We are conscious of the impact this will have on individuals and on communities and I regret that. But such actions are essential in order to preserve jobs in the future.” Rio is one of WA’s biggest employers, with about 15,000 workers across its huge iron ore, salt, mineral sands and diamond operations. Analysts expect several thousand contractors, who make up about half of Rio’s workforce, will face the axe as the mining giant scales back its once-ambitious plans to expand Pilbara iron ore production from 200 million tonnes a year to over 320 million tonnes. In addition, projects such as Argyle or the Dampier salt operations could be put up for sale as part of Rio’s accelerated asset disposal program. Mr Albanese would not rule out selling some Pilbara iron ore operations. Source:www.thewest.com.au