Rio Tinto to axe hundreds of jobs as part of drastic restructuring

Rio Tinto to axe hundreds of jobs as part of drastic restructuringHundreds of jobs are to be cut at Rio Tinto’s (ASX:RIO) Australian coal and iron ore operations, as well as around the globe, as the company embarks on an internal restructuring considered one of the most aggressive since CEO Sam Walsh took helm in 2012.

The move comes just weeks after the miner announced a 10% drop in annual earnings and launched a $2 billion share buy-back to return cash to investors. Rio warned then the measure would imply further cost cuts to help offset the damage done by the ongoing slump in commodity prices.

It also comes on the heels of a fresh and steep drop of iron ore prices. Last week the commodity fell below $60 a tonne, down from $140 a tonne at the start of 2014. Seaborne continues to be weak, with the 62% Fe import price including freight and insurance at the Chinese port of Tianjin hitting Monday $58.58 per tonne.

Since the end of 2012, just before Walsh assumed as CEO, the company’s workforce has gone from 71,000 to below 60,000 by December last year.

The company recently announced its intention to merge the copper and coal divisions, reducing Rio Tinto businesses to four main groups with diamond and minerals, aluminum, and iron ore divisions.

Uranium mined by subsidiary company Energy Resources Australia will join the diamonds and minerals group.

“My aim, as your chief executive, is to strengthen our business to ensure we are the most resilient in the sector,” Walsh told employees in an internal memo late February. “We need to be more responsive and remove bureaucracy to maintain our competitive advantage and deliver sustainable returns to shareholders.”