[REPORT] Rio Tinto to Slash Jobs at Australian Coal Mine
UK mining giant Rio Tinto (LSE:RIO) (NYSE:RIO) has revealed plans to cut 100 jobs from its Kestrel coal mine in Queensland, Australia.
According to Rio, the job cuts are part of the company’s continuous strategy to restructure its coal portfolio to remain competitive in Australia’s declining coal industry.
"The Australian coal mining industry is facing extremely challenging conditions, with prices continuing to decline through 2014 and the Australian dollar remaining strong,” a Rio Tinto spokesperson said.
“We will be consulting with all employees about these changes and providing support for those affected."
Weak demand from primary coal consumers such as China and India has put immense pressure on thermal coal prices. In addition, efforts to shift to natural gas for energy generation have affected demand going forward.
"We have worked to significantly reduce costs and improve productivity across all of Rio Tinto's Australian coal mines, but still more needs to be done,” the Rio Tinto spokesperson added.
Rio Tinto has been vigorously working to restructure its coal portfolio as part of its approach to capital allocation. The company announced in its second quarter earnings for 2014 it would lower capital expenditure guidance for 2014 by $2 billion to $9 billion. The goal is to maintain capital expenditure at $8 billion, allowing Rio Tinto to operate competitively in a subdued commodity pricing environment.
The Kestrel mine, which was previously known as Gordonstone Mine, supplies both metallurgical and thermal coal to the global markets. The mine is joint venture with Queensland Coal and Mitsui Kestrel Coal Investment.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.