Rio swings axe in world's 'second most profitable' business
One year ago it was dubbed the second-best business on earth behind the production of Apple iPads, but now Rio Tinto is cutting scores of senior staff from its West Australian iron ore division.
About 50 people were told late on Wednesday that their roles were no longer needed within the division, which ranks as the most profitable business in Australia's most lucrative export industry. It also is Rio's flagship, contributing close to 80 per cent of earnings.
But that exalted status has not saved it from the sort of job cuts that have swept the rest of the Australian economy in recent years.
Some of the workers are expected to be redeployed within Rio Tinto's global business, but most are expected to leave the company with redundancies.
The cuts, described within Rio as "delayering", fit within the company's drive to cut $US5 billion of costs over several years.
Rio has been scheduled to commit an extra $US5 billion in spending to its iron ore expansion program in WA later this year, and it is unclear if the latest round of redundancies will affect that decision.
Rio's new iron ore chief, Andrew Harding, referred to a "changing internal focus, from rapid growth to consolidation, and with it constraint on capital" in an internal memo to staff over the past 48 hours.
The note indicated that many of those made redundant were in senior management positions.
"At the general manager and manager levels, the principle of minimising both the number of layers, as well as functional overlaps, has been retained. As a result, some roles no longer exist within the organisation," he wrote.
It is believed the cuts affect only the WA iron ore division, and do not affect Rio's smaller iron ore operations in Canada and Guinea.
The company has already shed hundreds of Australian staff in the past year, after closing its Sydney office and losing many of the staff from within its Melbourne office.
One Rio employee recently told BusinessDay that working inside Rio was now a vastly different proposition to just a year ago. "You ask a colleague, 'Where is such-and-such today?', and they will answer, 'Didn't you hear we got rid of him last week?'," she said.
On a positive note, Rio announced on Wednesday night that it had struck a land-use agreement with the Yindjibarndi traditional landowners, which would give the company rights to explore, mine or build in certain parts of the Pilbara.
The Yindjibarndi are the same group that have had a long dispute with Andrew Forrest's Fortescue Metals Group over land access.