About 500 iron ore jobs to go at Rio Tinto

Iron ore accounts for almost 90% of Rio’s earnings. (Image of the Paraburdoo operation, in the Pilbara, courtesy of Rio Tinto.)

World’s second largest miner Rio Tinto (ASX, LON:RIO) is cutting more jobs across its iron ore division in Western Australia as part of a major restructuring of its most profitable division, announced in June.

While the company did not release numbers, it did confirm that  “rolling reductions” were underway, which are estimated to be around 500 jobs or 4% of Rio Tinto’s ore division’s workforce, the Australian Broadcasting Corporation (ABC) reports.

Fresh job cuts at Rio’s iron ore business are part of a major restructuring of the division, the miner’s most profitable one.

This would be Rio’s third major staff cut in the last two years. Currently, the company employs about 11,000 people after shedding about 700 workers early this year and about 800 in March 2015.

“The market outlook remains challenging and we currently have 1,000 initiatives underway across our business to reduce costs, improve productivity and ensure we remain internationally competitive,” it said in a statement quoted by ABC.

Speaking to reporters Monday, Western Australia’s Premier Colin Barnett urged Rio to ride out the tough times.

“Companies have got a responsibility to maintain workforce,” he said according to AAP. “Only two years ago, they were all saying they didn’t have enough workers. The world hasn’t changed that much.”

“Let’s face it – iron ore prices are pretty good,” Barnett said.

Iron ore prices went up close to $80 a tonne early this month and the steelmaking ingredient was selling for $70.34 on Monday, dropping more than $2 per tonne since Friday, according to the Metal Bulletin Index. BHP, Rio Tinto and Fortescue Metals Group have all flagged that they expect iron ore prices to fall further next year, perhaps back to about $40 per tonne.

A Rio spokesman would not comment on the latest job cuts but confirmed the company believes the market remained “challenging”.

Last week, the company announced it would suspend mining at one of its local operations for the first time since the global financial crisis forced Rio to begin to cutting costs.