Rio Tinto is about to lay off hundreds of workers

In an attempt to establish its position as a cost-effective exporter of iron ore to China, mining giant Rio Tinto plans to cut several hundred jobs in Western Australia. Information was sent to employees, highlighting the urgency of expediting the cost-cutting measures. In addition, Rio Tinto decided to merge its copper and coal divisions, leading to the start of a reduction in management jobs.

The company plans to streamline its operations across product groups such as diamonds and minerals, copper and coal, aluminum and iron ore. Because of this, the aluminum and iron ore divisions are likely to be restructured. In addition, the company is also restructuring its headquarters operations in an effort to cut costs. The miner previously froze hiring operations across all positions and began a thorough review of the organizational structure across various divisions.

Rio Tinto has achieved savings of $ 4.8 billion across the group since 2012 and intends to add an additional $ 750 million to savings in 2015 in cash spending in the iron ore sector. The company aims to bring costs down to $ 15 per tonne over the next 18-month period, provided oil prices do not have a major recovery.

Meanwhile, analysts believe iron ore prices will continue to fall in 2015. Raw material prices fell by almost 50 percent during 2014. As long as the supply of sea supplies outstrips the growth in demand, iron ore prices are expected to remain low. In the longer term, an increase in the supply of scrap steel to China could weaken the prospects for using iron ore as a raw material in the steelmaking process.