Rio Tinto is aiming to cut operating costs by a further US$3 billion over the next two years and remove US$3 billion in CAPEX compared to previous guidance, according to outgoing CEO Sam Walsh.
Speaking at the company’s annual general meeting (AGM), Walsh noted the company’s achievement in reducing costs by US$6 billion since 2013. But he said more was needed: “While we have achieved a great deal, we recognise the current environmental required even more from us.”
The company will reduce its CAPEX spend to US$4 billion this year and US$5 billion in 2017, after CAPEX spend of US$4.7 billion in 2015. Meanwhile, operating costs will be cut by US$1 billion this year and another US$1 billion in 2017.
This cuts will come not “at the expense of future growth by reassessing projects, lowering costs and only investing in the highest returning projects,” Walsh continued.
“These actions are designed to ensure we maintain out balance sheet strength and deliver shareholder returns commensurate with the economic environment and supported by the quality of our world-class assets.”
Rio Tinto’s coal assets remained cash-flow positive through 2015, “despite ongoing price challenges,” Walsh added, with minimal working capital. Over the last year, the company has completed or announced US$841 in coal assets sales.
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/coal/06052016/rio-tinto-announces-further-cuts-to-capex-opex-2016-729/