BHP warns Australian mining not ready for low-cost competitors
The boom in demand from China’s industrialization is now “past the period of aggressive growth,” BHP’s Australia President said.
Rio Tinto (ASX, LON:RIO) may have decided to hold onto its diamond business, ending more than a year of speculation about a potential sell off, but the diversified miner is not keeping its workforce intact and it is already letting go of 78 people at its Argyle diamond mine in Australia.
A spokesman for the company, quoted by The West Australian, said the decision was a continuation of Rio’s current focus on costs, drive for improved efficiencies and the planned transition of Argyle to a fully underground mine.
According to the source the measure only affects temporary construction workforce providing administrative, advisory and mining services to the project.
Rio’s diamonds unit, which includes a 60% percent stake in Canada’s Diavik mine and 78% in Murowa mine in Zimbabwe, reported a profit loss of $43 million in 2012, down from a $10 million profit in 2011.
However, Rio surprised the market by posting last week a 47% year on year production increase to 4.135 million carats in the second quarter of 2013.
Production at Argyle alone climbed 87% to 3.13 million carats as mining has fully transitioned to higher-grade underground operations.
Comments
Charlie Michael
Once a mine goes underground, costs arise astronomically, and stock dividends take a hit. Of course, some mineral deposits force the changes, not the company.