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Mining giant Rio Tinto has stripped US-based contracting giant Fluor of a big slice of its long-running, multimillion-dollar rail maintenance contract in the Pilbara, leaving hundreds of jobs under a cloud.
A Rio spokesman confirmed yesterday the company had decided to reduce the scope of Fluor’s contract after a review.
“Rio Tinto regularly assesses the performance of contractors across the business,” he said.
“We will be going to market to ensure future rail maintenance requirements are delivered.
“We are unable to provide any additional comment on commercial matters.”
Fluor’s US head office provided a statement this morning, saying: “Following a recent review, Rio Tinto Iron Ore has decided to reduce Fluor’s scope of work with its main focus remaining on the re-rail scope.
“Fluor will continue to work with Rio Tinto Iron Ore during this transition period.”
WestBusiness understands the review was prompted by a series of incidents on the mining giant’s 1700km rail network that raised concerns about safety.
It is believed Fluor was unable to satisfy Rio’s concerns despite extended talks between the two companies.
Rio has begun shortlisting alternative local contractors to handle the work taken off Fluor and will invite those parties to tender.
Other aspects of the work may be put to public tender.
Managing, maintaining and upgrading Rio’s massive rail network requires specific skills and many of the affected workers are expected to find work with the new contractors.
On its website, Fluor describes its association with Rio in the Pilbara as one of its longest-running contracts in the company’s 100-year history, having been in place since 1968.
“Keeping these railways safe and up to the task: that is Fluor’s commitment,” it says.
The contract change comes as Rio prepares to spend an extra $200 million on its Pilbara rail network this year to remove bottlenecks in its iron ore logistics chain.
In December, Rio’s iron ore boss Chris Salisbury said maintenance work last year had reduced some restrictions but continuing work was required this year to improve the network.
The mining giant, which shipped 330 million tonnes of iron ore from the Pilbara last year, wants to lift system capacity to 360Mt and ultimately to more than 400mtpa, enabling it to ramp-up shipping ore when market conditions suit.
Key to its plans is the so-called AutoHaul program, which aims to introduce driverless trains across its Pilbara rail network by the end of this year.
This article first appeared on thewest.com.au
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