Fortescue Metals has restructured its rosters to urgently cut costs in a sign it may axe hundreds of jobs because of plunging iron ore prices.
Fortescue's announcement added to fears about its viability unless iron ore prices improve and the belief that a domino effect has begun among the struggling miners in Western Australia's Pilbara region.
Atlas Iron was the first to fall in shutting its mines for now, threatening the future of its trucking contractor McAleese which has gone into a trading halt.
Fellow Pilbara miner BC Iron was also advised by Citi analysts to stop production if iron ore prices tumble further.
Now Fortescue, the world's fourth largest iron ore producer, finds itself on a list of eight global iron ore miners named by ratings agency Standard & Poor's as being placed on watch for a credit downgrade.
The news came as Fortescue revealed its mine rosters would change from a cycle of eight days on, six days off to two weeks on, one week off.
It has not said how much money it will save, but employees would now be at work more often and not have to be flown to and from mine sites as often.
A spokesman said job cuts could not be ruled out and the miner was looking at ways to transfer workers affected by the changes.
Fortescue is widely believed to be losing money at current prices, with the lower quality of its iron ore commanding less than $US40 a tonne compared to the benchmark price just below $US50 that the majors get.
The only Australian-based companies believed to still be generating cash are BHP Billiton and Rio Tinto, who Fortescue chief executive Nev Power has blamed for causing the global supply glut.
Mr Power said the roster changes would strengthen Fortescue's position to withstand the market challenges.
"In this environment, bringing our costs down rapidly and sustainably is critical and will place our company in the strongest possible position for the future," he said.
IG market strategist Evan Lucas said he did not see Fortescue getting many savings from the roster changes and he believed there would be significant job cuts.
Patersons Securities estimates the changes will cut costs by up to 1.5 per cent, and up to 770 employees could be cut, or 17 per cent of its directly employed workforce.
The Construction Forestry Mining and Energy Union reacted angrily, saying the new rosters would increase the time workers were away from their families.
"When you look at the salary packages of all of the executives, Fortescue, Rio Tinto, Chevron and the like, these executives are paid millions of dollars a year and that's where it should all start from," WA state secretary Mick Buchan said.
The looming rating downgrade by S&P indicated the company was in trouble, he said, coming after last month's failure to raise new debt - a $US2.5 billion bond issue - to service debt that is due between 2017 and 2019.
Fortescue's shares gained six cents, or 3.4 per cent, to $1.835.
Share
