$10 million cut out of Yarwun alumina refinery site

RIO Tinto is losing money from Gladstone's alumina refineries and it's the contractors who are being squeezed to turn that around.

Yarwun and Queensland Alumina Limited Contractors and suppliers will be worse off about $10 million through a re-tendering process that will look to make a saving on 750,000 hours (or around 90% of total contract hours).

We understand there have been tens of contractors already laid off, if not more, although nor the company or individual contractors were willing to discuss the details of this.

The company has confirmed a re-tendering process is underway and that they are delaying payments to current contractors; extending their payments from 30 days to 60.

This is all only part of a $300 million cost cutting effort across the Rio Tinto aluminium group worldwide announced to the London Metal Exchange this week by chief executive Alf Barrios (pictured).

Speaking to investors, he said Yarwun and QAL were continuing to lose money but they would "aggressively drive costs out of the business".

The price of aluminium is being driven down by an oversupply from China.

But Rio Tinto does estimate prices will increase mid-next year as Chinese production slows down and the country runs out of quality bauxite.

This paper spoke to the manager of a local contract firm who works for both QAL and Yarwun - he didn't want us to name him for fear he would lose his job - who said his employees were nervous but that he understood the need for drastic measures.

"We're happy with the reduction. I'm from Gladstone and if we take the two big players out of the town the impact would be quite severe," the manager said.

"I totally understand that it is out of their control."

He said his staff were nervous about job security but he was more nervous about the town. "I would like to know how many wages they have paid, children they have put through uni and homes they have put up," he said. "They have been great community partners since 1966 and it upsets me when people complain."

Rio Tinto wouldn't go into the expected cuts to contractors at QAL but were positive with the new mine in Weipa that the company would stay in the aluminium business for the long term as long as the refineries were profitable.


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