Miner Rio Tinto will cut 14,000 jobs, investment

Source: Agencies  |   2008-12-10  |     ONLINE EDITION

RIO Tinto Group will cut 14,000 jobs worldwide and reduce capital investment as part of new measures to reduce its debt amid waning demand for iron ore and other metals, the mining company said today.

Rio Tinto said in a statement it will try to sell "significant assets" that were not previously listed for sale in order to reach its goal of trimming AU$10 billion (US$6.6 billion) from its debt by the end of next year.

The job cuts -- 12.5 percent of its work force -- and reduction in operating expenditure are expected to save the company at least 2.5 billion Australian dollars (US$1.6 billion) a year by 2010, the London-based company said.

"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 in the statement. "We have undertaken a thorough review of all our operations and are executing a range of actions."

"By taking these tough decisions now we will be well positioned when the recovery comes," Albanese said.

Rio Tinto's AU$38.9 billion debt was a key factor in rival BHP Billiton withdrawing its hostile takeover bid last month in the midst of the global economic downturn. Much of that debt is from its US$38.1 billion acquisition of Canadian company Alcan last year.

The world's second-largest aluminum producer stressed it remains committed to its strategy of finding, developing and operating large, long life, low cost mining assets.

The company currently expects its global iron ore production and shipments for fiscal 2009 to be around 200 million metric tons (220.46 million tons). Aluminum production is forecast at 200,000 tons (224, 000 tons) and copper production at 830,000 tons (929,600 tons).

Rio Tinto is counting on the further industrialization of countries such as China and India to support higher levels of demand for metals and minerals.