London: Rio Tinto Group will freeze salaries for 2016 as the world’s second-biggest mining company warned that it sees no signs of respite in the commodities rout that’s eroded profits and threatened dividends for producers, reports Bloomberg News.
The freeze applies from the chief executive officer downward, Sam Walsh said in an e-mail to staff, a copy of which was obtained by Bloomberg News. London-based Rio will limit travel expenditure and further scrutinize spending on contractors and consultants, Walsh wrote in the Jan 12 e-mail.
Prices of metals to energy have extended losses this year after a rout in 2015 prompted miners to slash spending, seek to sell assets and accelerate efforts to trim debt. The Bloomberg Commodity Index, a measure of returns for 22 raw materials, on Tuesday dropped to the lowest since January 1991. Global growth isn’t proving sufficient to offset weaker expansion in China, the biggest commodities consumer, Walsh said in the e-mail.
“The pressure this is placing on our industry is significant and it is a tough time across the sector,” Walsh wrote. “It is important we recognize that the pressure isn’t going to let up. This situation is not temporary.”