Rio Tinto Job Cuts Blow
by Anglesey Today
Rio Tinto plc, the Anglo Australian miner which owns 51 per cent of Anglesey Aluminium Metal at Holyhead, has announced plans to cut 14,000 jobs worldwide in the face of worsening economic conditions.
The second largest aluminium miner in the world is very sensitive to movements in commodity prices, and base metal prices have fallen sharply over recent months as the world economy deteriorates and enters a recession.
Of the 14,000 planned job cuts, 8,500 are likely to be contractors along with 5,500 staff out of a total of 112,000. The company states that this will lead to a saving of $1.2 billion annually.
Rio's Chief Executive, Tom Albanese, said the company has to boost cash generation and reduce its $38.9 billion debt by a further $10 billion.
He added that taking tough decisions now meant the company will be better placed when the recovery comes.
This follows the recent decision by the world's largest miner, Australian giant BHP Billiton, to withdraw its $70 bn takeover bid for Rio Tinto, which it felt it could not sustain given the deteriorating credit conditions.
While the company already had plans to sell off around $15 bn of assets, the current economic environment means it has to look at "significant assets not previously highlighted for sale".
Some of these inlcude its joint ventures like the Anglesey Aluminium smelter outside Holyhead, which is 49 per cent owned by US firm Kaiser Aluminium and Chemical Corporation.
Questions will now arise as to whether or not the local Holyhead plant, which employs around 500 people, including contractors, will be safe from this consolidation exercise.
The plant outside Holyhead which earlier this year suffered a significant loss of output due to a transformer fire, needs to find a new supply of electricity after 2009, when its contract with nearby Wylfa nuclear power station expires.