Rio Tinto to slash costs, steps up iron ore output
to peak in 2012 at $16 billion, with its share of that at $13.6 billion, as it looked to focus on fewer big projects.
"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." Despite the challenges of higher labour and service costs and the strong Aussie dollar, Albanese said Rio has boosted the efficiency at its iron ore operations, so it now expected to reach a production rate of 290 million tonnes a year by the end of 2013, up from a target of 283 million tonnes.
"GREEN SHOOTS IN CHINA"
Highlighting its advantage over rival iron ore producers, Rio said its cost per tonne of iron ore would fall from $47
delivered to China, including royalties, shipping and sustaining capital costs, once its infrastructure expansions are completed. While all iron ore producers are suffering from this year's drop in iron ore prices, which are now around $118 a tonne or more than 20 percent below this year's high, the revenue blow will be cushioned for Rio Tinto as it is producing more tonnes."There's no doubt any marginal tonnes they can produce from the Pilbara without a capex increase is a good thing," said Tim arker, a portfolio manager at BT Investment Management, which owns shares in Rio
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