Rio Tinto\u2019s iron ore business is set to engage in a heavy cost cutting campaign, involving renegotiation of service contracts, reduction of scheduled maintenance task times, and changes to staff pay which will \u201creflect market conditions\u201d.<\/p>\n
An internal document leaked to Australian Mining this week showed Rio Tinto iron ore chief executive Andrew Harding had outlined a series of cost cutting requirements, including an immediate hiring freeze, which he said must be performed to maintain business success.<\/p>\n
The document was distributed by email to members of management, and was read aloud to workers on all Rio Tinto iron ore sites in Western Australia.<\/p>\n
The areas said to require urgent attention include:<\/p>\n
Cost-outs and capital reductions that are significantly below the existing plan;
\nThe renegotiation of significant service and supply contracts;
\nReflecting market conditions for employees and labour related costs;
\nThe extension of an immediate hiring freeze and review of organisational structures;
\nRevamping of the way we schedule maintenance – by intervals and task times;
\nA significant reduction in warehouse and stockpile inventories.
\nHarding stressed that \u201cthe whole business will be called to contribute to this work, with a degree of urgency\u201d.<\/p>\n
The document also said that all site superintendents will be subject to quarterly reviews, which would help to identify \u201cpinch points\u201d in the business.<\/p>\n
\u201cThese will cover safety, cost and productivity performance, as well as commitments for the forthcoming quarter,\u201d Harding said.<\/p>\n
\u201cI 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.<\/p>\n
\u201cIndeed, I expect that they will actually ensure that we can continue to be \u2018the best\u2019.\u201d<\/p>\n
Harding said the agenda was a large one, but \u201cnot unmanageable\u201d.<\/p>\n
Australian Mining contacted Rio Tinto to discuss the details of these adjustments, however a spokesperson for Rio Tinto said no further details could be disclosed at this point, and made the following statement:<\/p>\n
\u201cWe remain focused on maintaining our market competitiveness in very challenging industry conditions. For some time now our people have been pursuing cost and productivity improvements. We are constantly examining all parts of our business in order to remain strong and globally competitive.\u201d<\/p>\n
Recent rumours among staff on Rio Tinto sites around Western Australia suggest plans to cut the Australian iron ore workforce by 10 to 15 per cent, however Rio Tinto said these claims were incorrect.<\/p>\n
Rio Tinto will release their Quarterly Report on Thursday evening, February 12.<\/p>\n","protected":false},"excerpt":{"rendered":"