Reports are emerging that Rio Tinto may look to cut hundreds of jobs in the coming months.
The future of Rio Tinto’s West Australian iron ore operations is hazy, as up to 700 jobs may potentially be slashed, according to The West Australian.
It reports that workers have been told between 500 and 700 positions would be cut from its West Australian iron ore operations and Perth headquarters.
A Rio Tinto spokesperson declined to say whether jobs would be cut, telling Australian Mining the company does not comment on speculation on numbers, however he confirmed that the miner is currently focused on cost cutting measures.
“We are continuing to transform our business to ensure we remain globally competitive," the spokesperson said.
"Market conditions remain tough and we continue to focus on reducing costs and improving productivity.”
According to sources close to the matter, workers were recently told the miner needed to reduce operational expenditure by $1 billion.
In terms of job cuts, the source told Australian Mining that contractors are likely to go from the sites, followed by cuts at Rio Tinto’s offices.
However, they added that there was uncertainty on whether minesite fulltime staff will be cut.
Another source stated that workers will likely be informed whether they will be cut either tomorrow or the 15th of March.
If Rio Tinto were to cut positions, it would mirror the action it took the same time last year, when it cut between 700 and 800 workers from its West Australian iron ore operations.
The potential staff reduction comes on the back of Rio Tinto reporting a massive 51 per cent fall in full year profit year on year, and an $866 million net loss.
The miner’s underlying earnings fell from US$9.305 billion to US$4.540 billion year on year, while net cash generated dropped by a third from US$14.286 billion to US$9.383 billion.
It also dropped its progressive dividend, a move that was swiftly copied by fellow major BHP.
Walsh blamed market weakness for the poor results, with the “continued deterioration in the macro-environment [generating] market uncertainty”.
Rio Tinto sees little respite for the year, stating that “China’s high debt levels are expected to constraining the central government’s ability to broaden its stimulus policies, limiting the scope for meaningful investment in 2016”.
“The macro-economic consensus points to a moderate improvement in global growth in 2016, but volatility in financial and oil markets is a strong sign that macroeconomic risks abound, with geopolitical concerns also not far in the background.”
However, “Longer term, demand prospects remain positive and we expect this will support a recovery from the current cyclical low phase.”
In terms of iron ore, where the majority of job cuts are potentially to be located, Rio saw net earnings fall from US$7.956 billion in 2014 to US$4.013 billion in 2015.