Monday, December 22, 2008
Rio says to close 11 iron ore mines for two weeks
Monday, 22 December 2008
World No. 2 iron ore miner Rio Tinto Ltd/Plc is in the process of shutting down all its iron ore mines in Australia's Pilbara region for two weeks to cut production by 10 percent by year-end in the face of declining demand from steel mills. Each of Rio's 11 mines as well as its rail network spanning hundreds of kilometres across the the world's richest iron ore deposit will be placed on care and maintenance for two weeks starting Dec. 22, company spokesman Gervase Greene told Reuters.
"This will bring us close to our target of reducing this year's production from the Pilbara to between 170 and 175 million tonnes," Greene said.
The scale-back is necessary to meet lower demand for ore from steel mills in China and elsewhere as global industrial activity and manufacturing slows due to the financial crisis, Rio said earlier this year.
Most of the 6,500 staff working in Rio's Australian iron ore division are being furloughed during the shutdown, which is timed to coincide with the Christmas season, Greene said.
Rio is permanently cutting 14,000 jobs worldwide and putting assets up for sale as its attempts to cut costs and pay off debt because of depressed minerals markets.
Sliding metals prices and slowing demand have made those assets worth less, and the global financial crisis has made it tougher for potential buyers to get credit.
Another Pilbara miner, BHP Billiton Ltd/Plc has vowed to maintain production, saying sales for now were holding up during the downturn.
Merrill Lynch, Goldman Sachs JBWere and other brokerages are predicting next year's iron prices will be down by as much as 50 percent given the downsizing in steelmaking.
As adapted from Reuters
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