Reuters reported that a steep fall in iron ore prices over the last three months has forced global miner Rio Tinto to accelerate and deepen a cost cutting program across its back office.

Sources close to the situation said that this follows efforts of competing miners, including BHP Billiton and Anglo American, to tame rising costs at a time of sluggish economic growth and weaker metals prices.

A source with knowledge of the situation told Reuters that Australia's Rio Tinto which gets some 80% of its profits from iron ore and is the diversified miner most exposed to fluctuations in the steelmaking ingredient is cutting jobs in London and Melbourne.

The source said that it is also moving various departments to lower cost offices. The exploration, purchasing and shipping departments, for example, are being moved from Australia to Singapore and the health and safety department, currently in London, is being moved to India.

The source further said that "The company was taken by surprise by the iron ore price fall.”

He said that "Rio was very bullish on iron ore until a few months ago but those predictions have proven completely wrong so now it is drastically trimming costs, cutting positions outright or shipping departments or parts of them abroad.”

The miner had already announced its intention to shut down its Sydney office.

A spokesman for Rio Tinto said that "Like others in the industry, Rio Tinto is facing the challenge of increasing costs. We are actively seeking ways to tackle this. This includes a program of reductions in service and support costs across the organizations, which have been rising sharply in recent times."

Source - Thomson Reuters

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