“While the long-term outlook remains sound, the near term is undoubtedly more challenging,” said CEO Sam Walsh.
Mining giant Rio Tinto Rio Tinto (LON, ASX:RIO) said Friday the severe slide in iron ore prices, one of the main commodities it mines, won’t affect long-time promised returns to shareholders next year, as it will keep lifting dividends.
The company, which together with Brazil’s Vale (NYSE:VALE) and BHP Billiton (ASX:BHP) leads the global iron ore market, also said it would defer a decision on investing in Western Australia’s billion-dollar mine project, Silvergrass, until “at least the third quarter of 2015 at the earliest.”
Rio lowered its 2014 expenditure estimate to less than $8.5 billion, the lowest since 2010 and below its August forecast of $9 billion.
Resources companies worldwide have been shedding non-core assets and driving downs costs to strengthen their balance sheets, after years of heavy spending. As part of that trend,Rio lowered its 2014 expenditure estimate to less than $8.5 billion, the lowest since 2010 and below its August forecast of $9 billion.
Chief Executive Sam Walsh acknowledged the group was facing harsh market conditions. Iron ore prices have fallen by almost 50% this year after a surge in mine supply swamped the market, coal is mostly in the pits and copper fell Friday again hitting a four-year low.
Rio's pipeline of projects beyond iron ore.
“While the long-term outlook remains sound, the near term is undoubtedly more challenging,” Walsh said in a presentation to investors in Sydney. “However, Rio Tinto is soundly positioned to prosper against this backdrop of uncertainty because the current dynamics play to our strengths and our competitive advantages come into their own,” he added.
The world’s No.2 miner also announced its thermal coal ore reserves in the Hunter Valley of New South Wales have grown from a previously estimated 1.33bn tonnes to 1.88bn tonnes.
Yesterday the firm announced it had committed $350 million to the expansion of its Diavik diamond mine in Canada.
Rio Tinto will announce the size of any potential shareholder return and other capital management initiatives at the group’s full-year results in February.
CEO Sam Walsh’s full presentation to investors can be seen here.
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