“The decision by Tarong Energy Corporation and its partners to reduce power generation due to the worsening drought in southeast Queensland has led Rio Tinto Coal Australia to announce job cuts at its Tarong mine,” general manager operations Cam Halfpenny said today.

“The job losses were unavoidable and followed measures taken at the Tarong and Tarong North power stations to manage their water resources during the drought.”

Halfpenny said because the power station will need less coal, Tarong will significantly reduce production levels at the mine this year and “probably into next year or beyond, depending on the water situation”

Sacked employees and contractors are being advised of their options, which include applying for work at other Rio Tinto operations or voluntary redundancy packages.

The opencut thermal coal operation is the sole supplier to the Tarong Power Station, which generates about 30% of Queensland’s electricity.

In March 2006, Rio Tinto and Tarong Energy Corporation (TEC) entered into an agreement that provides TEC with the option to purchase the Tarong Mine and Kunioon deposit on or before June 2007.