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RE: Rio Tinto faces $10.8 Bn write down over Alcan purchase

Home Forums Refining Community Refinery News Rio Tinto faces $10.8 Bn write down over Alcan purchase RE: Rio Tinto faces $10.8 Bn write down over Alcan purchase

#6421

Charles Randall
Participant

<Looks like the Alcan Yarwun Project survived – which is good for Aluminum section. – CER>
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Rio Tinto slashes more jobs all the way to Mongolia
Article from: Hearld Sun     By Tony Grant-Taylor
December 03, 2008 12:00am

RIO Tinto, which outlined a multi-billion-dollar capital expansion plan as it resisted BHP Billiton’s takeover overtures, yesterday continued to slash proposed spending in light of its huge debt and sagging world economic growth.
With BHP having canned the bid and commodity prices plunging, Rio announced a major staff cut at its massive Mongolian copper joint venture.
It also effectively tossed its planned $1.1 billion expansion of its Kestrel mine near Emerald in Queensland up in the air, though the development of its Clermont mine, to replace Blair Athol, is apparently on track.
And it cancelled a contract associated with its $1.8 billion expansion of its Yarwun alumina refinery near Gladstone.
Oyu Tolgoi, the Mongolian copper-gold joint venture between Rio and Canada’s Ivanhoe Mines, announced it had cut about 250 jobs, representing around 40 per cent of its workforce, because of the global financial crisis and collapse in metal prices.
“In light of the global financial crisis and collapse of international prices for metals such as copper the Oyu Tolgoi project – which was projected to produce 440,000 tonnes of copper and 320,000 ounces of gold by 2011 – is implementing cost-saving measures which have necessitated some reductions in the workforce,” Oyu Tolgoi managing director Keith Marshall said.
Meanwhile, a Rio Tinto Coal spokesman – who only a couple of weeks ago said its $1.1 billion Kestrel expansion and the group’s $860 million Clermont open-cut mine development were full steam ahead – yesterday had become constrained by Rio’s corporate line that all near-term expansion plans are under review.
A Rio Tinto Alcan spokeswoman said news that Rio had cancelled a contract with Mac Services for a 300-unit village to house workers on its Yarwun project did not mean it had been put on the backburner.
Rather, the cancellation suggested a silver lining was appearing from the reassessment of previously ambitious resource development plans with labour easier to find.
Rio had managed to recruit 80 per cent of the workforce it needed for the project from the Gladstone region, the spokeswoman said.
It would therefore not need to import a lot of workers, something it obviously previously thought would be necessary because of a predicted continuing shortage of skilled workers across much of central Queensland.
“Based on the fact that we currently employ more than 80 per cent of our workforce out of the Gladstone area, our need for that employment village is not as critical as we had thought,” she said.
But the news who pushed Mac Services shares 17 per cent lower to $1.075.
Mac Services said it has agreed with Rio to terminate the village development agreement and the two companies would work to determine fair payment for work completed so far.
It still expected to have about 5400 rooms in resource provinces across the country by June 30 and said its existing villages continued to perform strongly in line with expectations.

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