Meanwhile, the firm remains the only global iron ore producer that has not slowed iron ore expansion plans, and the announcement regarding cost cuts was tempered by a recognition of the need to boost iron ore output. The business is forging ahead with $21bn in mine, port and rail work to boost its Australian capacity.
Rio Tinto has been cutting costs, reviewing other projects and closing coal mines in Australia due to depressed commodity prices, soaring costs and the persistently strong Australian dollar, according to a report by Reuters.
The mining group said it is aiming to cut more than $5bn of operating and support costs by the end of 2014, and would cut spending on exploration and evaluation projects by $1bn over the rest of 2012 and 2013. It also plans to cut spending on sustaining operations by more than $1bn in 2013.
“For me the theme for this year, next year and probably the extended period beyond that in this volatile environment will be everything having to do about cost control,” Rio Chief Executive Tom Albanese told reporters ahead of an investor seminar.
Rio’s cost per tonne of iron ore would fall to just over $35.50 from $47 delivered to China, including royalties, shipping and sustaining capital costs, once its infrastructure expansions are completed, said iron ore chief Walsh.
“I do believe we have an iron ore business without peer,” Albanese said. “I will never apologise for the quality of our iron ore business.”
Much of the cost cuts would come in its coal and aluminium assets, Albanese said, adding that support costs
in Australia had become the most expensive in the world, compared with five years ago when they were among the cheapest.
“I’ve been very concerned over the past few years that we’ve seen progressive escalation in our capital cost intensity,” Albanese said.
“So we’re just getting to a point now where we can’t run as many major capital projects around the world as we might have been a couple of years ago with the same balance sheet.”
