Booze ban at Rio Tinto mine means perks drying up

Mining heavyweight Rio Tinto's (NYSE:RIO) plan to ban alcohol at its Argyle Diamond Mine has some thinking that incentives to keep fly-in, fly-out workers on site are literally drying up.

The company offered no details about or explanation for the decision, saying only that it comes as Argyle shifts to underground mining.

"Argyle has moved into a new era of complex underground mining and transitioning to a dry camp is an important part of its future operating model," Shane Johnson, Argyle Diamonds managing director, was quoted by The Sydney Morning Herald as saying.

According to some in the industry, providing mining workers with generous on-site conditions has become unnecessary amid shrinking demand for such workers.

"The spending phase, when the focus was not on costs, is over and companies are now paring back costs to ensure they can produce the returns they’d hoped for," said resource analyst Peter Strachan, according to the newspaper.

Australian mine sites often have an on-site bar, or "wet mess," where workers can drink alcohol, socialize and unwind after their shift. But over the past few years, some mines have closed these facilities, citing safety concerns.

"You don't want drugs or alcohol coming into play when people are operating sophisticated machinery," Strachan said.

In May, two men died at Western Australia's Tropicana mine, operated by AngloGold Ashanti (NYSE:AU), following an alleged drunken fight.

Ironically, Rio Tinto criticized strict Western Australian liquor laws in the fall of 2012, saying they would "have a detrimental effect on our employees' ability to enjoy a quality lifestyle while living and working away from home."