Gina Rinehart's $10 billion Roy Hill iron ore project is facing delays of up to six months as the company pulls back on non-essential work amid delays in securing debt funding from a consortium of international banks.
It effectively confirms widespread market speculation that Mrs Rinehart would not achieve her ambitious target of first production at Roy Hill by late 2014.
_WestBusiness _understands that Roy Hill Holdings chief executive Barry Fitzgerald addressed workers at the company's Perth office yesterday, telling them it would be pulling back expenditure over the next six months in an effort to cut costs.
Roy Hill's project management contractor WorleyParsons is understood to have been told that about half of its estimated 200 crew would be cut amid a wider restructuring effort, which also included the departure of WorleyParsons' contract manager.
Sources say Mr Fitzgerald told workers there were no plans to shed staff from Roy Hill's own staff but that budgets would be cut across the board as the company pulled back on spending. While work would continue on its Pilbara project, Roy Hill had pushed back giving a final go-ahead on non-essential works contracts and would restrict spending as it appeared unlikely debt funding would be in place by the end of this year.
The delays to securing the debt, now expected to be closed by the end of the first quarter next year, could push back the first shipment of ore from the 55 million tonne per year mine until mid-2015.
_WestBusiness _understands the banking consortium is more concerned about cost pressures in the Pilbara than a weak iron ore price.
A Roy Hill spokesman late yesterday confirmed a meeting had been held but said it was to explain to workers that the project had moved into its next phase.
WorleyParsons would not comment directly on the estimated 100 jobs cut by Roy Hill. "While overall employee numbers in WorleyParsons' Australian business have increased over the past year some isolated pockets of the business, including the project team assigned to the Roy Hill project, have been impacted by normal project activity resulting in the redeployment of staff on to other projects and some redundancies," a spokesman said.
Fears of the mining boom's end gained further strength after 900 coal mining jobs were slashed at BHP Billiton and Xstrata's east coast coal operations.