Rio Tinto to slim workforce as it battles weak metal prices

LONDON: Global mining firm Rio Tinto plans to cut costs and jobs across six divisions, sources said this week, as the company battles a slump in world commodity prices.

Rio Tinto, the second largest diversified miner, is heavily reliant on the price of iron ore, which has fallen by about 50 percent in the last year alone.

London-listed Rio said on Friday its energy chief was leaving and it would fold its coal and uranium businesses into two other units, in a reorganisation aimed at slashing costs.

In an internal note to employees which expanded on the announcement, Rio Tinto's chief executive instructed six divisional heads to remove duplication and formulate plans to revise the structure of their divisions in the coming weeks.

The note made no specific reference to the number of jobs that could be cut but one source said there could be hundreds, which could help Rio better withstand the relentless fall in the price of iron ore and other commodities. "It is becoming more difficult to deliver further efficiencies with our current organizational structure," CEO Sam Walsh said in the note, according to one of the sources, who is close to the company.

"I realise that for some of you the changes I have outlined will be challenging and in some circumstances they will result in good people leaving our business. We need to be more responsive and remove bureaucracy to maintain our competitive advantage and deliver sustainable returns to shareholders."

Rio's underlying earnings for the six months to Dec. 31 fell 30 percent from a year earlier, but were well above analysts' forecasts, thanks to cost cuts already implemented to preserve cash against collapsing commodity prices.