Thursday, 29 November 2012 08:43
Rio Tinto plans to cut spending and make savings worth billions of dollars in the next few years due to volatile market conditions.
Rio said it is aiming to reduce its operating and support costs by more than US$5 billion ($4.81 billion) by the end of 2014.
It would also cut spending on exploration and evaluation projects by US$1 billion ($961.95 million) over the remainder of 2012 and 2013, Rio said.
Capital expenditure on approved projects will taper off from their current levels in 2013, it added.
"We are taking further tough action to roll back the unsustainable cost increases of the past few years and are maintaining a relentless focus on improving productivity," chief executive Tom Albanese said in a statement.
"We are investing in the highest returning opportunities, delivering major projects on time and are taking advantage of the inbuilt flexibility in our phased investment programs.
"We have the ability to respond to changing market conditions and I am confident we have the right strategy to maximise shareholder value in the long term."
The short-term macroeconomic outlook remains volatile, with major uncertainties about future economic growth in the United States and Europe, the company said.
But it said it was guardedly optimistic on China's prospects.
Recent economic data from China suggests early signs of an improvement in growth, and Rio expects this to continue in 2013, causing a slight rise in economic growth to above eight per cent.
"Today we are highlighting the strong future earnings potential from iron ore volume increases and higher-priced new titanium dioxide contracts," Mr Albanese said, ahead of a presentation to investors later on Thursday.
"And we are showcasing the excellence of our West Australian iron ore business, which is delivering productivity improvements and holding down the costs of expansion despite the current headwinds."
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