Rio Tinto has announced job and operational cuts.

Leading international mining group Rio Tinto has announced it will cut 14,000 jobs and slash operating costs and expenditure in order to reduce its net debt by US$10 billion (£6.7bn) by the end of 2009.

The actions are being taken “in response to the unprecedented rapidity and severity of the global economic downturn” and the job cuts will affect 8,500 contractor jobs and 5,500 employee roles. These cuts alone will result in a saving of $1.2bn, marginally helping to reduce the company’s overall debt of $38.9bn.

Tom Albanese, Rio Tinto’s Chief Executive, said: “Given the difficult and uncertain economic conditions, and the unprecedented rate of deterioration of our markets, our imperative is to maximise cash generation and pay down debt. We have undertaken a thorough review of all our operations and are executing a range of actions.

“We will minimise our operating and capital costs to appropriately low levels until we see credible and meaningful signs of a recovery in our markets, but will retain our strategic growth options.”

In addition to job cuts, Rio Tinto will also be reducing its capital expenditure from $9bn to $4bn, and will be cancelling or deferring a number of its projects. Some of the company’s offices will also be consolidated, including its headquarters in London.

The announcement of cuts and reductions follows the news at the end of November that BHP Billiton, the world’s largest diversified resources company, had withdrawn its takeover bid for Rio Tinto – an acquisition that Rio Tinto was opposed to.

BHP Billiton decided not to pursue its offer because it “was not in the best interests of [the company’s] shareholders”. Don Argus, BHP Billiton’s Chairman, said at the time: “…we have concerns about the continued deterioration of near term global economic conditions, the lack of any certainty as to the time it will take for conditions to improve and the risks that these issues imply for shareholder value.”