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Iron Ore February 27, 2015 06:00:14 AM

Hundreds of WA iron ore jobs at risk, says Rio Tinto

Paul Ploumis
ScrapMonster Author
In an attempt to affirm its position as the world's cost-effective iron ore exporter to China, the mining giant Rio Tinto plans to cut several hundreds of

Hundreds of WA iron ore jobs at risk, says Rio Tinto

CANBERRA (Scrap Monster): In an attempt to affirm its position as the world’s cost-effective iron ore exporter to China, the mining giant Rio Tinto plans to cut several hundreds of Western Australian jobs. A memo was sent to staff highlighting the urgency of speeding up its cost cutting measures. Also, Rio Tinto has decided to merge its copper and coal divisions, leading to top management level job cuts.

The company will streamline its operations into four product groups- diamonds and minerals, copper and coal, aluminum and iron ore. Out of this, aluminum and iron ore divisions are not likely to be restructured. In addition, the company will also restructure the headquarter operations in a bid to cut costs. The miner had earlier put an immediate hiring freeze on all positions and initiated thorough review of organizational structure at various divisions.

Rio Tinto has made $4.8 billion in cost savings across the group since 2012. It aims to add another $750 million to cost savings in 2015. The iron ore cash costs as at end-Dec ’14 was under $17 per tonne. The company aims to bring down the cash costs to under $15 per tonne within the next 18 months period, provided oil prices do not stage a major recovery and Australian dollar prices slide further.

Meantime, analysts see the iron ore prices to fall further in 2015. The prices of the raw material had plunged by nearly 50% during 2014. As long as seaborne supply exceeds demand growth, iron ore prices are expected to remain subdued. Over the longer term, increased supply of steel scrap in China may dampen the prospects of iron ore’s use as raw material in steel making process.

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