Rio Tinto to cut 14,000 jobs to cope with slump

Rio Tinto Group will cut 14,000 jobs worldwide and reduce capital investment as part of new measures to reduce its debt amid waning demand for iron ore and other metals, the mining company said Wednesday.

Rio Tinto said in a statement it will try to sell "significant assets" that were not previously listed for sale in order to reach its goal of trimming $6.6 billion US from its debt by the end of next year.

The job cuts — 12.5 per cent of its work force — and reduction in operating expenditure are expected to save the company at least $1.6 billion US a year by 2010, the London-based company said.

"Given the difficult and uncertain economic conditions, and the unprecedented rate of deterioration of our markets, our imperative is to maximize cash generation and pay down debt," Chief Executive Tom Albanese said in the statement.

"We have undertaken a thorough review of all our operations and are executing a range of actions. By taking these tough decisions now, we will be well positioned when the recovery comes."

Rio Tinto's debt was a key factor in rival BHP Billiton withdrawing its hostile takeover bid last month in the midst of the global economic downturn. Much of that debt is from its $38.1 billion US acquisition of Canadian company Alcan last year.

It was not immediately known where the job cuts will take place.

The company did not identify what projects could be scaled back, but weekend reports suggested it may halt proposed aluminum and iron ore projects in Canada. Major projects planned or that are in the works in Canada include an expansion of an aluminum smelter in Kitimat, B.C., and an expansion of a smelter in the Quebec community of Saguenay.

The world's second-largest aluminum producer stressed it remains committed to its strategy of finding, developing and operating large, long-life, low-cost mining assets.

The company currently expects its global iron ore production and shipments for fiscal year 2009 to be around 200 million metric tons (220.46 million tons). Aluminum production is forecast at 200,000 tons (224,000 tons) and copper production at 830,000 tons (929,600 tons).

Rio Tinto is counting on the further industrialization of countries such as China and India to support higher levels of demand for metals and minerals.