Rio to Cut 14,000 Jobs, Halve Spending to Reduce Debt

Rio to Cut 14,000 Jobs, Halve Spending to Reduce Debt

Dec. 10 (Bloomberg) -- Rio Tinto Group, the world’s third- largest mining company, will eliminate 14,000 jobs and slash $5 billion in spending next year to reduce debt as the global financial crisis curbs demand for metals.

Since the company’s third-quarter operations review on Oct. 15, “demand conditions have worsened further and as a result, the group’s priorities have reoriented around conserving cash flow and reducing near-term borrowings,” London-based Rio said in a statement to the Australian stock exchange today. The job cuts account for about 14 percent of the 97,000 workforce.

Chief Executive Officer Tom Albanese has pushed back a plan to sell $10 billion in assets this year as the global economy slows and commodity prices decline. Rio plans to cut its debt by another $10 billion by the end of 2009, after reducing it by $3.2 billion in the third quarter of this year to $38.9 billion.

“We will minimize our operating and capital costs to appropriately low levels until we see credible and meaningful signs of recovery in our markets,” Albanese said in the statement. “We will expand further the scope of assets we are targeting for divestment.”

The company may delay $32 billion of new projects and expansions next year as the financial crisis curbs demand for metals, Credit Suisse Group AG said Dec. 2.

BHP Billiton Ltd. abandoned its hostile $66 billion takeover bid for Rio on Nov. 25 because of Rio’s $42.1 billion of debt, turmoil in global markets and slumping demand for commodities. Rio cut iron ore output last month by 10 percent this year because of reduced demand from steelmakers in China.

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