Reorienting priorities

Anglo-Australian mining company, Rio Tinto, has announced that it will cut 14,000 jobs and curb spending in response to slowing demand for raw materials.

In October, the group said that the economic outlook had weakened demand.

In its latest announcement, the company stated: ‘Since that time demand conditions have worsened further, and as a result the group’s priorities have reoriented around conserving cashflow and reducing near-term borrowings.’

The company plans to slash capital expenditure from $9bn to $4bn next year in an attempt to reduce controllable operating costs by at least $2.5bn per year in 2010.

The group will also reduce headcount throughout its global operations with 8,500 job losses to be made in contractor positions.

Rio Tinto said it will sell significant assets to expand the scope of targeted divestment and reduce net debt by $10m by the end of 2009.

The company has also stated that it will consolidate its offices, including its head office in London.

Tom Albanese, chief executive of Rio Tinto, said: ‘Given the difficult and uncertain economic conditions, and the unprecedented rate of deterioration of our markets, our imperative is to maximise cash generation and pay down debt.

‘We have undertaken a thorough review of all our operations and are executing a range of actions.

‘Notwithstanding the current financial turmoil, we continue to enjoy a suite of key assets that 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.’