Rio Tinto share price in focus as company freezes hiring

Rio Tinto (LON:RIO) has enforced a hiring freeze at its iron ore division and warned of a "degree of urgency" to quickly achieve significant reductions in costs. Shares in the FTSE 100-listed miner have edged up so far in today’s trading.

According to a leaked memo from Rio’s chief executive for iron ore operations, Andrew Harding, sent to company staff last week, the group will execute aggressive cost cuts across the division, as the miner fights to maintain its mantle as the lowest-cost producer in Australia’s Pilbara region.

According to Harding, the scenario for 2015 and the following years “reinforces the absolute need for us to maintain our position as the lowest-cost producer, particularly when compared with other Pilbara producers […] To maintain favourable cash cost earnings, we must substantially and quickly decrease our operating costs."

Rio Tinto is scheduled to release its annual results tomorrow, with analysts expecting that the group will star among the top five global miners with a return in billions of dollars to shareholders, even as the firm is set to report its worst half-year profit since 2009.

Reuters quoted Ben Lyons, a portfolio manager at ATI Asset Management as saying: "In our opinion Rio has significantly greater flexibility (than BHP) at this point in time to pursue short-term capital management initiatives".

According to forecasts reported by the London-based newswire, Rio is expected to announce a buyback of UK-listed shares in the range of $1.5 billion to $3 billion (£0.98 billion to £1.96 billion). The goal of the move is to please investors enough to beat off any new takeover bids from Glencore Plc (LON:GLEN) chef executive Ivan Glasenberg, who was snubbed by Rio last year and could come back with a new offer come 8 April, under UK legislation.

As of 14:03 GMT today, Rio’s shares were trading at 2,998.50p, up 0.20 percent intraday. The group’s stock has declined over 11 percent during the past 12 months. According to the Financial Times, as of 06 February 2015, the consensus forecast amongst 35 polled investment analysts covering the FTSE-100 listed miner has it that the company will outperform the market.