The Managing Director of Rio Tinto Coal Australia said the global collapse in coal prices has forced his company to find efficiency savings at operations in the Hunter Valley.
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But Chris Salisbury told nearly 180 guests at a breakfast briefing in Muswellbrook that significant transformation work has already been done by Rio Tinto and its coal operations are in a "cash positive" state.
"We've been predicting coal prices to fall potentially further [below US$62 per tonne] this year and the benchmark price certainly has been lower than what we've seen for many, many years," Mr Salisbury told the audience.
"We have gone through a significant improvement in productivity and that did result in people losing their jobs, but I can't predict the future [and] I can't guarantee anybody's job, let alone my own.
The Chronicle asked how many employees had been let go at Rio Tinto's Hunter Valley operations as a result of the mining downturn, but Mr Salisbury declined to share the figure.
"We will continue to look for opportunities to improve costs and productivity across the board, but we don't have any definitive plans right now to reduce employees," Mr Salisbury said.
He did concede capital is "very, very tight" and the best projects within Rio Tinto are competing for the pool of available funds.
"If we were, for instance, to expand Mt Pleasant obviously it's got to compete against other global projects.
"Capital is a premium within the Rio Tinto group and we have commitments to return wealth to shareholders - we've got to do that first - and what's left out of operating cash flow has to run the business," Mr Salisbury said.
The coal division boss described Rio Tinto as a much "leaner, more productive, more commercially-savvy" company following a "deep and aggressive" improvement program over the past two years.
The outcome, said Mr Salisbury, removed US$24 a tonne in operating cash costs from Rio Tinto's Australian coal operations delivering more than $665 million in cash cost savings.
Chris Salisbury said, while it is currently a tough environment in which to do business, Rio Tinto is thinking about local suppliers, with Coal and Allied introducing specific local criteria on tendering evaluations and giving local firms better "visibility of upcoming work."
He told the gathering more than $960 million was spent with NSW suppliers in 2014, about 60 per cent of the company's total supply spend.
Mr Salisbury said the coal sector will face challenging conditions in the near term, with increased market volatility and political uncertainty in some emerging economies.
But he also quoted 2013 International Energy Agency projections (assuming no new climate change-related policies beyond those already in place) that predict demand for coal will increase by nearly 50 per cent by 2030.
"The Upper Hunter is having its own little global financial crisis now."
- Jenny Williams, senior research fellow, Hunter Research Foundation
Hunter Research Foundation's senior research fellow, Jenny Williams, provided the audience with some sobering economic indicators for the Upper Hunter.
"It's been a pretty tough year in the Upper Hunter [and] our indicators suggest this has been the most difficult year economically over the 14 we've seen.
"There are more businesses struggling than are enjoying buoyant conditions and what we think happened is the mining boom very much protected this area from the effects of the global financial crisis - it's kind of delayed it - and really the Upper Hunter is having its own little global financial crisis now," Ms Williams said.
Jenny Williams said the unemployment rate is likely to climb further in the Upper Hunter, currently sitting between nine and 10 per cent.
She said the Hunter Research Foundation is concerned about this figure, but even more worried about the Upper Hunter's youth unemployment, which is approaching 20 per cent.
Dr Alan Rai, principal economist with the Hunter Research Foundation, talked about the region's strengths and weaknesses.
He said recent Free Trade Agreements negotiated with Australia's near neighbours provide opportunities for growth.
"There's opportunities around our services sector more generally; advanced manufacturing in pharmaceuticals, medical equipment and energy; and we have a lot of arable land and that plays to our strengths in agriculture and tourism," he said.
Dr Rai said businesses need to focus on a phrase called 'servitization,' which is the delivery of a service component as an added value when providing products.
He also said renewable energy should be examined as an area of opportunity for the region.
"The longer term currents support renewable investment.
"We have the resources to do this, we have the CSIRO, we have existing firms that are doing this and doing it well outside the region, we have the capabilities, the skills and the knowledge.
"But investment in this area has been, for want of a better word, shockingly low in the Hunter," Dr Rai said.
Dr Rai said China is expected to increasingly move away from using our thermal coal, to gas and renewables, and this trend over time will provide the Hunter region with opportunities to transition.