Mining giant, Rio Tinto, recorded a loss of US$866 million in 2015 on earnings that more than halved to US$4.5 billion. Earnings from the company’s coal assets were up, however, at US$492 million from US$349 million in 2014.
That saw coal end the year back in the black with net earnings of US$45 million compared to a net loss of US$83 million in 2014. The real damage came as metals prices plunged with the company’s flagship iron ore business recording a fall in net earnings of US$4.2 billion (51%) to just under US$4 billion.
Meanwhile, net earnings from the company’s copper assets – which are grouped in the same division as coal – fell from US$951 million to just US$237 million.
“Weaker Chinese demand led to a further deepening of the cyclical downturn in most commodity markets in 2015,” the company said in its results statement. “The iron ore price dropped below US$40/t […] representing an 80% fall from the peak of the market in 2011 […] Prices for several other commodities, such as aliminium, thermal and metallurgical coals are at levels preceding the China boom or only seem briefly in the depth of the Global Financial Crisis.”
In response, the company said it would start a new round of cost cutting with the aim of slashing operating costs by a further US$1 billion in 2016 and another US$1 billion in 2017. The company also cut its CAPEX to US$4 billion in 2016 and US$5 billion in 2017 – a reduction of US$3 billion on previous guidance.
Rio’s dividend policy has also been updated with the board deciding to axe the company’s progressive dividend policy, under which it promises never to cut its dividend, in favour of a more flexible approach that “will allow the distribution of return to reflect better the company’s position and outlook”, said Rio’s Chairman, Jan du Plessis.
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/mining/11022016/rio-tinto-slips-into-the-red-in-2015-2016-219/