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Rio puts faith in iron ore after Alcan

By on April 18, 2013

Miner

A Rio Tinto worker inspects iron ore stockpiles at the outback area of Marandoo. Rio’s new CEO has admitted it was once a mistake to buy aluminium maker Alcan six years in the past. Provide: Equipped

RIO Tinto has admitted it used to be a major mistake to purchase aluminium maker Alcan six years ago and in consequence the corporate is now additional likely to favour some commodities over others.

Addressing his first annual general meeting, chief government Sam Walsh stated Rio used to be fascinated with raising money via using promoting property in 2013.

“we are concentrated on important cash proceeds from divestments and are reviewing quite a lot of conceivable non-core belongings for divestment, along with those we have already introduced, akin to Pacific Aluminium and Diamonds,” Mr Walsh steered shareholders in London.

Rio in February introduced its first ever full-yr web lack of just about $ US3 billion ($ 2.9 billion).

as a result of the very fact then the sphere’s 2nd-biggest iron ore producer has been slashing jobs to chop costs.

Mr Walsh said Rio had additionally bolstered funding committee controls and approaches.

“this may occasionally Increasingly be certain … that we make investments most effective in projects that deliver returns neatly above our worth of capital,” the chief government stated.

He said 2012’s capital expenditure of $ US17.Four billion “shall be our peak year of funding”.

Rio got Alcan in mid-2007. Chairman Jan du Plessis talked about in hindsight the transaction used to be “badly timed on the excessive of the market”.

“on reflection, we subsequently wish to acknowledge that the acquisition has had a major poor affect on shareholder value,” he said.

Chief financial officer Guy Elliott stated on account of the Alcan expertise Rio had begun “to rethink the agnostic means that we’d presumably have in opposition to one commodity versus each other”.

“We do (now) have views upon each and every commodity and nearly no doubt do favour some more than others,” he said in London.

Rio has been criticised for its close to entire dependence on iron ore despite calling itself a diverse instruments company.

Iron ore in 2012 contributed $ US9.24 billion of the body of workers’s $ US10.2 billion in income.

However Mr du Plessis insisted iron ore was once doing “fantastically neatly” whereas different operations, similar to aluminium, have been struggling.

“Our view is that within the lengthy-time period basis … in virtually any possible macro-financial scenario, we imagine iron ore costs will likely be such that the money we are actually investing in Western Australia will present us just right returns,” he said.

Mr Elliott would not disclose what property Rio was once once taking a look to promote this year However insisted there’d be plenty of urge for food for them.

“there are plenty of buyers,” the manager monetary officer informed the London assembly.

“lots of them are consumers, sovereign wealth cash, opponents.”

Mr Walsh reiterated Rio was on target to ship its iron ore boom plans within the Pilbara.

The Oyu Tolgoi challenge used to be due for production throughout the first half of of the year dependent on ongoing talks with the Mongolian govt, the CEO mentioned.

A shareholder in his 80s criticised the large pay packets going to executives.

The pay to Rio’s boss “used to be enough to pay for the funeral services and products of Margaret Thatcher”, he talked about to applause from the floor.

In response he used to be prompt salaries were a “very small share” of Rio’s total price base.


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