Rio issues cost warning to suppliers
Rio Tinto's top iron ore brass has met with its 50 biggest suppliers and told them the miner would leave "no stone unturned" in efforts to further cut costs in the Pilbara but warned that safety must not be compromised.
The suppliers were told they too had to "cut their cloth" to survive as Rio forced through a new cost regime, now that its massive investment spree in the Pilbara was coming to an end.
But Rio said it would be "relentless" in its efforts to further improve safety, in an attempt to allay fears cost cutting, that so far has taken more than $700 million out of the business, would jeopardise high safety standards.
The meeting, understood to have taken place on Friday and hosted by the iron ore division's mines, supply chain and asset development leadership, came as Rio also began to cull up to 800 workers across mines, rail, port and head office.
The cull, flagged two weeks ago, started last week when the first redundancies were identified. The process is expected to take at least another week.
Rio yesterday confirmed the meeting with suppliers.
"Tough industry conditions are expected to continue for some time," a spokesman said. "It's important that we reduce waste, remove duplication and simplify the way we do things. If we can improve together, then we will thrive together."
Rio's relentless cost cutting, to protect its high iron ore profit margin, is driven by the metal's weak price but also competition from BHP Billiton, which has a stated claim to become the Pilbara's cheapest producer.
