Rio Tinto: More Cost-Cutting for Iron Ore Division
Commodity prices just aren’t what they used to be.
UK mining company Rio Tinto has announced more cost-cutting initiatives for its iron ore division, which will involve reduction of scheduled maintenance task times, renegotiation of service contracts, and changes to staff pay.
According to Australian Mining, an internal document was leaked showing Rio Tinto iron ore chief executive Andrew Harding delineating a series of cost cutting requirements, including an immediate hiring freeze, which he stated was imminent to maintain business success.
The leaked document also said that superintendents for site operations will be subject to quarterly reviews.
“These will cover safety, cost and productivity performance, as well as commitments for the forthcoming quarter,” Harding said. “I do not intend that any of these actions, and the extra efforts required on safety, will compromise our objective of continuing to be the best iron ore company in the world.”
The areas said to require urgent attention include:
• Cost-outs and capital reductions that are significantly below the existing plan;
• The renegotiation of significant service and supply contracts;
• Reflecting market conditions for employees and labor related costs;
• The extension of an immediate hiring freeze and review of organizational structures;
• Revamping of the way we schedule maintenance - by intervals and task times;
• A significant reduction in warehouse and stockpile inventories.
Gary Wood, CFMEU’s mining and energy secretary, said he did not expect Rio Tinto’s plan to have a major impact on workers.
"You sort of wonder what's behind this," Wood said.
"Our initial thought is it's shareholder driven, letting them know they're reacting to the market, but when you look into it, it's really just about cost cutting and being prudent in their management style."
He added, "If [Rio Tinto] wants to increase their tonnage from 290 million to 360 million tons [of iron ore shipped a year], they're going to need labor.”
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.