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| Miner Rio Tinto cuts 14,000 jobs | Miner Rio Tinto cuts 14,000 jobs |
| (about 17 hours later) | |
| The world's third-largest mining firm, Rio Tinto, is cutting 14,000 jobs as part of plans to reduce its debt by $10bn (£6.8bn) by the end of next year. | The world's third-largest mining firm, Rio Tinto, is cutting 14,000 jobs as part of plans to reduce its debt by $10bn (£6.8bn) by the end of next year. |
| It also plans to defer some of its planned spending on exploration and combine its two London offices. | It also plans to defer some of its planned spending on exploration and combine its two London offices. |
| Rio Tinto, which is listed in the UK and Australia, currently employs 97,000 people worldwide. | Rio Tinto, which is listed in the UK and Australia, currently employs 97,000 people worldwide. |
| It said it was responding to "the unprecedented rapidity and severity of the global economic downturn". | It said it was responding to "the unprecedented rapidity and severity of the global economic downturn". |
| In the past few months, Rio Tinto has been fending off a takeover approach from rival BHP Billiton, which finally abandoned its offer in November. | In the past few months, Rio Tinto has been fending off a takeover approach from rival BHP Billiton, which finally abandoned its offer in November. |
| Price moves | Price moves |
| Rio Tinto said that closing one of its London offices would not necessarily lead to job cuts. Less than 2% of its workforce are based in the UK. | Rio Tinto said that closing one of its London offices would not necessarily lead to job cuts. Less than 2% of its workforce are based in the UK. |
| Those attempts by Rio to generate cash and thus reduce its massive borrowings of $39bn will cause disappointment and indeed hardship in many communities all over the world Robert Peston, BBC business editor Read Robert Peston's blog | Those attempts by Rio to generate cash and thus reduce its massive borrowings of $39bn will cause disappointment and indeed hardship in many communities all over the world Robert Peston, BBC business editor Read Robert Peston's blog |
| It said that the job cuts would comprise 8,500 contractors and 5,500 employees. | It said that the job cuts would comprise 8,500 contractors and 5,500 employees. |
| As a global miner, Rio Tinto is very sensitive to commodities prices and exchange rates. | As a global miner, Rio Tinto is very sensitive to commodities prices and exchange rates. |
| It benefited from soaring metals prices in the first half of the year, but has since suffered as they have fallen back. | It benefited from soaring metals prices in the first half of the year, but has since suffered as they have fallen back. |
| But falling oil prices have been good news for it - a $1-a-barrel fall in the price of oil adds about $11m to the group's earnings. | But falling oil prices have been good news for it - a $1-a-barrel fall in the price of oil adds about $11m to the group's earnings. |
| Debt problems | Debt problems |
| Rio Tinto's shares ended Wednesday trading up 256 pence to just above £15, although they are still well off the year's high above £70 a share. | |
| Analysts say the level of its debt has been one of the factors depressing the company's value. | Analysts say the level of its debt has been one of the factors depressing the company's value. |
| FROM THE TODAY PROGRAMME More from Today programme | FROM THE TODAY PROGRAMME More from Today programme |
| "Their share price has been really slaughtered because of that debt and the BHP bid falling over," said Peter Chilton at Constellation Capital Management in Sydney. | "Their share price has been really slaughtered because of that debt and the BHP bid falling over," said Peter Chilton at Constellation Capital Management in Sydney. |
| "Probably the biggest issue is the net debt they have got." | "Probably the biggest issue is the net debt they have got." |
| Its net debt stands at almost $40bn, which will be more expensive to finance in future as a result of the credit crunch. | Its net debt stands at almost $40bn, which will be more expensive to finance in future as a result of the credit crunch. |
| But there is some concern that cutting back on spending on exploration will hit growth prospects. | But there is some concern that cutting back on spending on exploration will hit growth prospects. |
| "This goes a long way to ensuring they have enough cash over the next two years to make their debt payments," said Glyn Lawcock at UBS in Sydney. | "This goes a long way to ensuring they have enough cash over the next two years to make their debt payments," said Glyn Lawcock at UBS in Sydney. |
| "The question now is which projects they have to give up. That will determine the growth prospects for the company and its relative attractiveness." | "The question now is which projects they have to give up. That will determine the growth prospects for the company and its relative attractiveness." |