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Roy Hill turns to unskilled workforce amid drive to cut costs

Roy Hill Holdings Pty Ltd. is hiring low-paid and unskilled workers as part of its drive to keep costs low and diversify the workforce at its US$10 billion namesake iron ore mine in Western Australia, Bloomberg News reported March 29.

Roy Hill, which is owned 70% by Hancock Prospecting Pty Ltd., 15% by Marubeni Corp., 12.5% by POSCO and 2.5% by China Steel Corp., outlined plans in December 2016 to hire 500 new workers within 18 months.

The company hired 858 workers over the past twelve months and will add another 650 people, with recruits including farm workers, small business owners and even amateur netball players that can drive a truck or operate heavy machinery.

Workers with experience could be paid about A$150,000 at other mines in the state, while Roy Hill offers around A$100,000 for the same job, according to Giles Lenz, Roy Hill's general manager of human resources.

Roy Hill also incorporates cost-saving measures like a 344-kilometer railway line that links the mine to its export terminal at Port Hedland, as well as remotely operated machines. The mine delivered its first tonne of ore in late 2015 and expects to produce 55 million tonnes this year.

Iron ore prices plunged to below US$40 per tonne in 2015, compared to 2011 highs of US$190 per tonne, as demand in China plummeted on the back of slowing economic growth.

Prices rebounded in 2016 and were seen at US$94.86 per tonne in February, according to the report, with a forecast to drop to US$58 per tonne towards the end of 2017.

Miners are working to reduce costs due to the volatility in the iron ore prices, with producers including BHP Billiton Group and Fortescue Metals Group Ltd. saying supplies are again rising.