Mine rejection will cost jobs, Rio Tinto warns
Rio has already cut 40 jobs after its permission to expand the Mount Thorley mine was overturned in the NSW Land and Environment Court in April after residents from the tiny town of Bulga succeeded in a battle against the project.
Rio appealed the decision last week, and on Monday applied to expedite the appeals process.
In an affidavit filed with the original appeal, it said the immediate effect of not being able to proceed with the extension was that an area known as Saddleback Ridge could not be mined, and that coal production would drop from 12 million tonnes a year to 10 million tonnes.
"Significant job losses are expected if economic conditions remain the same unless the mine can maintain its volume of product coal produced," it said. "Not being able to maintain the production level at 12 million tonnes for 2014 is likely to result in many hundreds of job losses."
Rio said the mine had an existing workforce of 1300, and the extension would create an additional 150 jobs over its life.
The NSW Land and Environment Court's decision has been slammed by Rio and industry bodies, including the Australian Coal Association, for increasing uncertainty in the sector already besieged by weak pricing and a high Australian dollar.
Opponents of the mining lobby say Rio has overstated the number of jobs the mine would create.
"These types of claims are all too common in economic assessments commissioned by the coal industry," Richard Denniss, executive director of left-leaning think tank the Australia Institute, said.
Meanwhile, Rio Tinto plans to almost halve its London head office, according to Reuters, cutting more than 200 jobs as it tries to slash more than $US5 billion ($4.8 billion) in costs by the end of next year. Rio has been reviewing high-cost office locations including London since last year, as it battles falling commodity prices.
Rio last year cut back office staff in Australia, targeting Melbourne and closing its Sydney office.
Frequently Asked Questions about this Article…
Rio Tinto has appealed a decision that blocked the extension of its Warkworth coal project and has applied to the NSW Supreme Court to expedite the appeals process so it can reverse the Land and Environment Court ruling.
Rio Tinto says the block on the extension could lead to "many hundreds of job losses." The company already cut 40 jobs after another expansion (Mount Thorley) was overturned, and it says the Warkworth extension would have created about 150 additional jobs over the life of the mine.
In an affidavit Rio said not being able to mine an area called Saddleback Ridge would reduce coal production at the site from 12 million tonnes a year to 10 million tonnes a year.
No. Opponents of the mine and commentators such as Richard Denniss from the Australia Institute say industry economic assessments often overstate job numbers. The article notes critics have questioned Rio's claims.
Rio Tinto and industry bodies, including the Australian Coal Association, have criticised the decision, saying it increases uncertainty in a sector already facing weak prices and the headwind of a high Australian dollar.
Rio plans to almost halve its London head office, cutting more than 200 jobs as part of efforts to save more than US$5 billion by the end of next year. The company has been reviewing high-cost offices and has previously cut back office staff in Australia, including targeting Melbourne and closing its Sydney office.
Rio has lodged an appeal and formally applied to the NSW Supreme Court to speed up the appeal process. The article does not provide a specific timetable for when the court will decide on the expedited hearing or the appeal itself.
This dispute highlights legal and operational risks tied to coal projects: court rulings can materially affect production, workforce numbers and company costs. Investors may want to monitor the appeal outcome, Rio's announced cost-cutting measures, and broader coal market conditions mentioned in the article (weak pricing and a high Australian dollar).
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