05/06/2009 - 14:57

Job losses feared in BHP-Rio JV proposal

05/06/2009 - 14:57


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BHP Billiton has quelled concerns that a proposed tie-up with Rio Tinto's Western Australian iron ore business will lead to further job losses while one union calls for key Rio executives to resign.

BHP Billiton has quelled concerns that a proposed tie-up with Rio Tinto's Western Australian iron ore business will lead to further job losses while one union calls for key Rio executives to resign.

The mining giants today announced a merger of their respective iron ore production business in WA, excluding certain assets, in a bid to realise savings and synergies in excess of $US10 billion ($A12 billion).

BHP has agreed to pay Rio $US5.8 billion ($A7.2 billion) to even its interest in the joint venture to 50 per cent.

Both miners have around 20,000 employees and contractors in WA but over the past few months have shed thousands of jobs in Western Australia following the global downturn.

BHP chief executive Marius Kloppers today said both companies had invested heavily into their respective iron ore businesses over the past couple of years and as a result, employee numbers have grown.

However, while the finer details of the JV had yet to be nutted out, Mr Kloppers acknowledged there may be a doubling up in some areas of the combined WA iron ore entity.

"Some things might be oversupplied and other functions might be undersupplied," he said.

"I would say that our net emphasis here is going to continue to be on very large job growth on a very sustainable set of investments for many years and I don't think that these combination plans change that in any material way."

Premier Colin Barnett today expressed concern over potential job losses arising from the JV, saying he would seek clarification from the two companies to ensure the expected $12 billion savings would not translate into more job losses in WA.

"Security of employment is the first consideration for the government in whatever is proposed," he said.

The Australian Maufacturing Workers Union (AMWU) said the JV news couldn't have come at a worse time for WA workers and their families.

"The companies are saying that by combining their Iron Ore production facilities they can save over $12 billion," AMWU state secretary Steve McCartney said.

"This can only mean that hundreds, maybe thousands more local jobs will go when this merger happens.

"They are talking about using the same rail lines and joining together adjacent mines which will no doubt lead to a mass clear out of train drivers, miners and other specialised trades people at various BHP and Rio Tinto Iron Ore facilities in the Pilbara.

"BHP and Rio Tinto need to guarantee that Western Australian workers and their families don't suffer as a result of this announcement."

The question of property also looms for the combined iron ore entity, with BHP currently the anchor tenant at Multiplex Group's office tower on the Westralia Square site, which is currently under construction.

Meantime the Australian Workers Union (AWU) has called for key executives at Rio Tinto to resign, after the mining giant walked away from a proposed $US19.5 billion ($A24.32 billion) deal with Chinalco.

The AWU said the decision on the much criticised deal decision amounted to a belated "reality check" by the Rio Tinto board.

"One result of this u-turn should be the resignations of key decision makers at Rio Tinto," AWU national secretary Paul Howes said in a statement on Friday.

"The AWU wants to see successful resource companies in this country, not poorly led corporations who are on bended knees begging for money from inappropriate financial sources."

Rio Tinto on Friday scrapped the proposed tie-up with Aluminum Corporation of China (Chinalco) in favour of a $US15.2 billion ($A18.96 billion) equity raising and a iron ore joint venture with rival BHP Billiton Ltd.

It said the Chinalco deal, which would have lifted the China state owned enterprise's stake in the company to 18 per cent and given it small stakes in various key mining project, was no longer viable.

The deal had been strongly criticised by shareholders as being too favourable to Chinalco.


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