5,000 Jobs At Risk in Rio Tinto Aluminum Sell-off
Unemployment jitters have alluded at least 5,000 workers of Rio Tinto after the Anglo-Australian global miner announced on Monday it wants to divest from thirteen of its aluminum units, including refineries and smelters, to restructure its Alcan aluminum business and reinforce the company's financial performance.
Australian Workers Union (AWU) national secretary Paul Howes has alleged Rio Tinto did not inform the union of any sell-off plans before it made its announcement.
"Rio Tinto does n't consult with their workforce about any major moves that they make, whether it be concerning their direct employment conditions at the smelter, or whether it be macro-economic conditions or moves Rio Tinto has made," he said in ABC News.
Rio Tinto said in a statement its stakes in six Australian and New Zealand assets will be turned over to a new unit, Pacific Aluminium, before being sold. Seven other operations in France, Germany, the U.S. and U.K. will likewise be offered to the market.
Howes said AWU will seek commitments from the new owners to guarantee that the jobs and conditions of workers at the Gove mine and refinery in the Northern Territory and the Tomago (NSW), Boyne (Queensland) and Bell Bay (Tasmania) smelters are ensured.
Central Queensland federal MP Ken O'Dowd also expressed concerns over the impending sell-off, saying jobs could eventually go offshore.
"If they go offshore, the jobs will have to go offshore," O'Dowd told ABC News.
"Whether Australian jobs go to Indonesia or Africa or South America, the people here will either have to go with Rio Tinto to those foreign countries or stop here without a job."
The AWU leader said he strive to work that a collective agreement covers smelter workers in Tasmania and Queensland, and that the legal scheme would proceed regardless of the selloff.
"Rio has never had a good reputation as an employer, so union members expect that any new owner will actually be an improvement," Howes said in The Australian.
Gladstone Mayor Gail Sellers, however, downplayed fears that Rio Tinto will get rid of workers alongside the divestment of its aluminum business.
Sellers said her office held talks with a Rio Tinto company representative.
"They said they're not going to get rid of any staff at this time and it'll be business as usual," she said in ABC News.
On the other hand, analysts predict an actual sale could happen only some 18 months from now.
"The move by Rio makes sense as it disposes of assets that on a relative basis generate lower returns and have lower cash margins than the overall aluminum group," Glyn Lawcock, a Sydney-based analyst at UBS AG, told Bloomberg. "However, the current environment is not conducive we believe to a quick sale, and the process may take upwards of 18 months to complete."
Rio Tinto has divested more than $11 billion in assets since 2008 to reduce debt after its $38 billion purchase of Alcan Inc.
Meanwhile, Rio Tinto had denied its decision to sell parts of its aluminum units has nothing to do with the carbon tax policy of the Gillard government, stressing a lot of multiple factors were behind it and not just only environmental-linked concerns.
Rio Tinto also said that regardless of the carbon tax regulation, the sale will still push through.
The carbon tax will be imposed on 500 of Australia's biggest polluters, mostly mining companies, from July 2012, before going to a carbon trade scheme in 2015.
It passed legislation at the Lower House last week. It has yet to pass the Senate in a vote due in mid-November.