[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.
Lynas revenue jumps 21% as rare earth prices jump
Australian miner Lynas Rare Earths posted a 20.6% rise in revenue in the March quarter as selling prices for the key metals it mines hit record highs amid strong demand, particularly for neodymium and praseodymium (NdPr).
NdPr is used in magnets for electric vehicles and windfarms, in consumer goods like smartphones, and in military equipment such as jet engines and missile guidance systems.
The company said it plans to maintain production at 75% however, as it seeks to continue to meet covid-19 safety protocols and grapples with shipping difficulties. Shares in Lynas fell 6.1% after the results.
“They have faced a few logistics issues, and it would be good to know when they are going to start lifting their utilisation rates a bit,” said portfolio manager Andy Forster of Argo Investments in Sydney.
“Pricing has been pretty strong although it may have peeled back a bit recently. I still think the medium, long-term outlook is pretty good for their suite of products.”
Lynas post ed revenue of A$110mn ($85.37mn) for the three months to the end of March, up from A$91.2mn a year earlier as prices soared.
It said its full product range garnered average selling prices of A$35.5/kg during the March quarter, up from $23.7 in the first half of the financial year. “While the persistence of the covid crisis, especially in Europe, calls for careful forecasts for our business ahead, we see the rare earth market recovering very quickly,” said Lynas, the world’s largest rare earths producer outside China.
Freight demand has spiked during the pandemic, while the blockage of the Suez Canal in March delayed a shipment to April.
Lynas’ output of 4,463 tonnes of rare earth oxide (REO) during the quarter was marginally lower than 4,465 tonnes from a year earlier.