11 Dec 2008

Mining giant with NZ interest to slash 14,000 jobs

1:33 pm on 11 December 2008

Debt-laden mining giant Rio Tinto is axing 14,000 staff and contractor jobs worldwide because of the unprecedented speed and severity of the economic downturn.

Rio Tinto currently employs 97,000 people in New Zealand, Australia, Europe and North America.

It is the majority owner of New Zealand Aluminium Smelters Ltd, which operates the Tiwai Point smelter in Southland.

According to the Rio Tinto website, 787 fulltime equivalent employees and 133 contractors work for New Zealand Aluminium Smelters Ltd.

It is not clear whether Rio Tinto's New Zealand operations will be affected by the plan to cut jobs and reduce spending.

Invercargill Mayor Tim Shadbolt said he had been told the future of smelter workers is on the agenda at a Rio Tinto management meeting in Brisbane on Thursday.

The company has said an announcement about whether there will be any New Zealand job cuts will be made early next year.

The move to end 5,500 of its employee roles and 8,500 of its 15,000 contractor jobs worldwide comes just over a fortnight after BHP Billiton aborted a hostile $US66 billion bid for Rio Tinto, partly because of its massive debt.

Rio Tinto plans to shed 13% of its workforce and would cut capital expenditure by $US4 billion in 2009.

Analysts and ratings agencies have also criticised the company for the debt - currently sitting at about $US41 billion - as the global miner's share price has plummeted from $US63.90 just before BHP Billiton walked away, to $US37.40 on Wednesday.

Rio Tinto chief executive Tom Albanese says the staff cuts will save the company $US1.2 billion a year.

"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," Mr Albanese said on Wednesday.

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

Mr Albanese would not say how many jobs would go, only that stakeholders and employees would be told first.