Rio Tinto Limited (ASX: RIO) announced to the market this morning that it was 'streamlining its product groups and corporate functions' as part of its continued focus on efficiency and costs.
What:
- Assets will be condensed into four portfolios; Aluminium, Copper and Coal, Diamonds and Minerals, and Iron Ore
- As a result, the Energy division's Harry Kenyon-Slaney will leave the business after 25 years
- Aluminium and Iron Ore product groups remain unchanged
- Coal and Uranium (formerly the Energy portfolio) will be split, with coal moving to the copper portfolio, and uranium to the Diamonds and Minerals portfolio
So What:
Rio might save a few dollars on executive salaries. Additionally there might be a reduction in staff numbers if some positions become duplicated as a result of the streamlining process.
With BHP Billiton Limited (ASX: BHP) really clamping down on costs and aiming to become the world's lowest cost iron ore miner, Rio Tinto will be working overtime to ensure that doesn't happen.
I suspect however that the simplification of the operating structure and departure of a senior executive is the prequel to additional job losses and further developments at Australia's largest mine.
Fairfax media reported this morning that Rio was potentially 'poised to cut several hundred jobs from its iron ore division in Western Australia'.
While Rio declined to comment on the article, the cuts do seem more likely in the context of today's ASX streamlining announcement.
After all, streamlining increases the ease with which duplicated job functions can be spotted and removed.
Or if you take a more cynical perspective, it's better for staff morale if senior executives are seen to be suffering job losses before more junior roles.
With another Fairfax article reporting that Rio has advanced plans for increasing automation at its mine sites, the potential for job losses seems even more likely.
Whether or not the losses actually occur, it looks as though Rio has finally brought out the big guns in its efficiency drive – which is good news for shareholders, and bad news for competitors.
