Rio Tinto has put a freeze on wages across the company as it seeks ways to meet the challenge of sliding commodity prices.
According to a report by the magazine Australian Mining, employees of the mining giant got the news in a memo from CEO Sam Walsh:
“Late last year, we saw market prices continue to rapidly fall. What we see ahead is very sobering. This situation is not temporary and our industry is moving into the new normal which means we must continue to be one step ahead.”
Walsh told staff the pay freeze decision had been a very difficult one.
“I’m sure you are disappointed by it, as am I, but it is necessary given the market context,” he wrote. “It doesn’t reflect the hard work or effort put in by everyone.”
Short term and long term incentives and the employee share plan are unaffected.
A Rio Tinto spokesman said the company had no comment at this time.
The big miner, like its peers, has been cutting costs, increasing ore output, pulling back on capital spending and cutting debt in response to falling commodity prices. A strengthening US dollar and falling oil prices is helping the process.
Rio Tinto has about 60,000 employees, 24,000 of them in Australia.
Rio Tinto posted a better than expected first half underlying earnings of $US2.9 billion. But the result is still 43% less than the $US5.19 billion for the same period a year ago. Analysts had been expecting $US2.4 billion.
Earnings from iron ore were down 49% to $US4.09 billion. This was driven by the impact of lower prices, down 46% on average.
The miner has a target of $1 billion in cost savings this year.