Cra Tie With Rtz Leads To Elimination Of 100 Jobs
The Age
Monday July 8, 1996
More than 100 jobs in CRA's exploration division have emerged as casualties from the group's $27 billion ``merger" last December with its London parent, RTZ.
The job casualties flow from a comprehensive review of the $400 million global exploration effort by the two companies, now united through a dual-listed companies structure.
CRA was at pains yesterday to demonstrate that it had not gone soft on Australia because of a new-found subservience to RTZ following the establishment of the DLC.
``Australia remains highly prospective and RTZ-CRA will continue to allocate a high proportion of its exploration expenditure worldwide in Australia, more indeed than any other area," the company said. RTZ-CRA's head of exploration, Mr John Collier, said the review had identified the most marginal programs and ``caused us to take some hard decisions".
The group believes it will continue to be the biggest Australian minerals explorer, but would not estimate what its continuing budget would be. Annual expenditure in recent years has run at more than $100 million.
Exploration was one of the few areas identified in the DLC process as offering the potential for cost savings through the elimination of duplication and the rationalisation of operating structures. The size of the local job cuts nevertheless has caused some surprise. The rationalisation is also causing concern for the junior explorers involved in exploration joint ventures with the mining giant.
RTZ-CRA estimated yesterday that continuing annual savings from the global shake-up of exploration would be more than $US50 million ($A62.8 million), offset initially by once-off restructuring costs.
Up to 330 positions are expected to be slashed from the global exploration team, with CRA's team to take about one- third of the cut with numbers slashed from more than 600 to ``roughly" 500 people. The cut in Australia will involve the closure of exploration offices in Orange (NSW) and Karratha (WA), as well as CRA's retreat from non-Argyle diamond exploration and a contraction of its gold/copper effort.
The retreat from diamond mine operations caused immediate pain yesterday for Zephyr Minerals and Australian Kimberley Diamonds. The share prices of both were slugged because of CRA's withdrawal from their marine diamond project in the Cambridge Gulf and offshore King George River areas of Western Australia.
Before its withdrawal, CRA must first complete an infill seismic program over a new gravel target defined on the joint venture's leases. As a result, the junior partners will at least have advanced their project to the exciting but costly dredging stage.
As little as six weeks ago, CRA was involved in long-term planning for the joint venture, making yesterday's announcement as much a surprise to its joint venture partners as it must have been to some of its own staff.
LOCAL IMPACT OF RTZ-CRA'S GLOBAL EXPLORATION SHAKE-UP.
* Commodity focus changes: Diamonds, gold and copper demoted.
Uranium, iron ore, zinc and coal grow in relative importance.
* Job losses and closures: More than 100 technical and service jobs to go. Office closures in Orange (NSW) and Karratha (WA).
* Junior joint venture partners hit: Zephyr and Australian Kimberley Diamonds take share price hits on news of the decision to walk from their diamond exploration joint venture. More departures to come.
* The winners: RTZ-CRA shareholders get $US50 million cost saving and more focused exploration effort.
© 1996 The Age