Rio Tinto Cuts More Jobs at Argyle Diamond Mine in Western Australia

Researched by Industrial Info Resources Australia (Perth, Australia)--Rio Tinto plc (NYSE:RIO) cut an additional 78 jobs at its Argyle diamond mine in Western Australia, in a bid to further reduce operating costs. The mine is located in the eastern Kimberley region and has produced an estimated 750 million carats of rough diamonds since it commenced operations in 1983.

The recent announcement comes after Rio slashed 350 construction jobs in February. Almost 500 jobs have been cut from the Argyle mine since September 2012. The workers, who were employed by contractor Macmahon (ASX:MAH), were part of a temporary construction workforce providing administrative, advisory and mining services. The contract with Macmahon is still in place.

The Argyle mine completed its underground development in June to produce 20 million carats per year. The expansion involved extending the decline and expanding the processing plant's ore-handling capacity to 9 million tonnes per year. This expansion was designed to extend the mine life to 2020. Since the underground completion, the company has recorded a 57% increase in production over its previous quarter, totalling 3.1 million carats.

A Rio Tinto spokesperson said that the decision was a "continuation of our approach to focus on costs, drive for improved efficiencies and transition to a fully underground mining operation." The company also was in the process of divesting the Argyle mine late last year; however, the plans were subverted. Speculative increase in demand from China and other Asian countries was the reason behind retaining the diamond mine. The sale was estimated to fetch an estimated $1.3 billion for the company.

The company also sold its Clermont and Blair Athol thermal coal mines in Queensland in order to cut further costs and boost shareholder returns. The company is under global pressure to cut costs, and CEO Sam Walsh has set a cost reduction target of $5 billion to be achieved by the end of 2014.

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