RIO TINTO GROUP LONDON (Reuters) - Anglo Australian miner Rio Tinto (>> Rio Tinto plc) (>> Rio Tinto Limited) plans to cut jobs in mergers and acquisitions and business development, three sources said, to cut costs as it battles a slump in commodity prices.
The plan signals diminished interest in dealmaking at the world's second-largest mining company, which rebuffed a takeover approach by rival Glencore (>> Glencore PLC) last summer.
"M&A is just not on the cards for now. There is no shareholder mandate for that,” a banking source said, adding that Rio was planning to more than halve the number of M&A roles.
Two sources said there were about 50 people currently employed in both those areas, while the third said the headcount was larger.
The sources said a review had highlighted that various roles in M&A and business developments in central offices and in the various divisions was redundant.
A spokesman for Rio Tinto declined to comment.
Rio Tinto has been cutting costs to defend itself from a fall in commodity prices, particularly iron ore, which provides the bulk of its earnings. Prices have more than halved in the last year alone due to oversupply and weak demand.
"What they’re doing is completely slashing costs at the M&A department," a second banking source said.
"All these business development guys are hidden in various divisions – potash, uranium, some are ex bankers or consultants. They will take an axe to all of that. It’s still very raw, will take until at least the summer.”
Rio's head of M&A Philip Mitchell left the company earlier this year and was replaced by head of business development Matt Halliday.
Earlier this month Rio announced that it would let its energy chief go and would roll its coal and uranium businesses into two other units as part of its cost savings efforts.
"Rio has done some rounds of job cuts before but this time it is different. They are really targeting highly-paid managing directors and directors. People that are lower level, like analysts for example, should be safe this time," a third source said.
The Rio Tinto spokesman referred Reuters to a Feb. 27 statement in which Chief Executive Sam Walsh said a number of key corporate functions would be reshaped to reduce costs.
“These changes are part of our continuing business transformation to reduce costs, simplify and strengthen our company and deliver sustainable value for shareholders," Walsh said at the time.
Sources have said the company is planning to cut several hundreds jobs across six divisions in an effort to slash costs.
(Editing by Susan Thomas)
By Anjuli Davies and Silvia Antonioli
