MELBOURNE (Reuters) — Rio Tinto, the world's second largest miner, is going to freeze all pay in 2016, ramping up its cost-cutting effort to weather what it expects to be a prolonged commodities slump, according to a memo from chief executive Sam Walsh.
Walsh said he expected 2016 would be tougher than last year, with prices for commodities at 10-year lows or worse and no one would receive a pay rise from the CEO down. Top executives have also been asked to cut down on travel this year.
"What we see ahead is very sobering," Walsh said in the memo that was first cited by a trade publication, Australian Mining.
"This situation is not temporary and our industry is moving into the new normal which means we must continue to be one step ahead," according to the memo to Rio staff.
Walsh said the industry had faced pressure from weak global growth after the 2009 financial crisis and now due to slowing growth in China as it transitions from an infrastructure and construction-led economy to one driven by consumers.
"The pressure this is placing on our industry is significant and it is important we recognise that the pressure isn't going to let up," Walsh said.
Rio has been slashing costs ever since Walsh took the reins three years ago and is seen to be better off than its peers, having cut debt sharply after nearly sinking under loans it took on for an ill-timed $38 billion takeover of Alcan in 2007.
"In fact, this challenging market presents an opportunity to widen the gap between us and our competitors," Walsh said.
A Rio Tinto spokesman declined to comment on the memo