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Barnett urges Rio to 'maintain workforce'

AAP logoAAP 21/11/2016

As Rio Tinto prepares to slash about 500 staff in Western Australia, Premier Colin Barnett has urged the mining giant to maintain a solid workforce amid improved iron ore prices.

While the company has confirmed there will be staff cuts, it has declined to say how many, but it is believed about 130 Perth-based roles will go along with about 350 jobs in its WA iron ore business.

Speaking with reporters on Monday, Mr Barnett urged the mining giant to ride out the tough times.

"Companies have got a responsibility to maintain workforce," he said.

"Only two years ago, they were all saying they didn't have enough workers. The world hasn't changed that much.

"Let's face it - iron ore prices are pretty good."

Iron ore prices approached $US80/tonne earlier this month, roughly double the price of late last year, but the analyst consensus for next year is a return to $US40/t.

"The market outlook remains challenging and we currently have 1000 initiatives underway across our business to reduce costs, improve productivity and ensure we remain internationally competitive," Rio Tinto said in a statement.

Meanwhile, WA opposition leader Mark McGowan says the contentious iron ore tax hike proposed by state Nationals leader Brendon Grylls is spooking the industry.

"Mr Grylls is just attacking the mining industry day after day and that destroys confidence," Mr McGowan said.

"Mr Grylls' and the Liberal-National government's approach no doubt is driving employment out of Western Australia, and I think what's happened today is a sign of things to come."

He said Mr Grylls had been "grossly irresponsible" while Mr Barnett should have pulled him into line.

Mr Barnett says he's against Mr Grylls' call to increase the iron ore lease rental paid by Rio Tinto and BHP Billiton by 20-fold to $5 per tonne to raise $7.2 billion over four years.

The state government has, however, unsuccessfully tried to talk the companies into paying the charge as an up-front sum.

Figures last week showed WA's job market is now the weakest in the nation, with the unemployment rate surging to 6.5 per cent last month.

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