How Rio Tinto plans to cut costs by $US1 billion – by Amanda Saunders (Sydney Morning Herald – August 10, 2015)

You might not think vending machines would feature in Andrew Harding’s cost cutting drive. But for the Rio iron ore boss, cost-cutting is coming down to micro detail, which can save millions for a business that will ship 340 million tonnes of iron ore this year.

Rio has started putting safety glasses and gloves in a vending machine that requires a staff access card to withdraw them. Previously, the equipment was left in boxes for workers to take, with no way of monitoring use.

“It’s tracking and about feeling accountable for the use of the product,” Mr Harding told Fairfax Media after the miner last week posted a 43 per cent fall in underlying earnings to $US2.9 billion for the June half.

“There is no restriction on them – it’s safety equipment. But instead of someone going ‘this is unlimited, what the hell’ kind of thinking, it reminds people that it’s an important item, contributing to cost reductions. People know that they need to be thoughtful about the use of them, they are not taking more than they need.”

The initiative has cut use of safety equipment by 15 per cent to 20 per cent at some iron ore sites, and almost halved usage of some items at others. That saves Rio millions of dollars each year, Mr Harding said.

At three sites, Rio has been replacing halogen bulbs with LED illumination in street lights and on haul trucks as they are more energy efficient and require no maintenance. This has reduced energy consumption by 125,000 kwh a year and will save several million dollars, at least, over the life of the light bulbs.

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