In an apparent confirmation that Australia's mining sector is moving on a slower lane, mining giant Rio Tinto (ASX: RIO) plans to cut jobs in Melbourne and close an office in Sydney.
The Rio decision aims to cut costs amid falling commodity prices due to the slowdown in the Chinese economy and focus of the eurozone on solving the bloc's debt crisis.
The Wall Street Journal quoted an internal e-mail of David Peever, Rio managing director for Australia, that the some jobs in its Melbourne headquarters will be axed, while other employees will be transferred to Rio's offices in Perth and Brisbane.
While the Anglo-Australian miner will retain Melbourne as its corporate headquarters, Rio is downsizing. The company will also shutter an office in Sydney where it has 30 employees. If Rio needs a presence in Sydney, it would instead resort to leased serviced offices.
Rio's move has been anticipated since its shares are trading at three-year lows due to the decline in commodity prices, rise in mining operations costs and the strong Australian currency.
Besides Rio, BHP Billiton (ASX: BHP) is also scaling down on its expansion plans with the Olympic Dam expansion as its first target. Besides reviewing its expansion plans, BHP is also cutting overhead expenses and taking a second look at the number of its contractors and workers globally.
Last week, Deloitte Access Economics warned that Australia's mining boom will peak in 2014, while on Monday, the Mining Business Outlook report said only 25 per cent of Australian mining firms plan to invest in major projects in the next 12 months.
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