London, England — 14 February 2013 – Rio Tinto chief executive Sam Walsh says that under his leadership the British-based mining giant will have an unrelenting focus on pursuing greater value for shareholders. This will involve three basic objectives.
Presenting Rio Tinto’s results for the year ended 31 December 2012, he said the first objective was to reinforce capital allocation discipline by pursuing greater value for shareholders and investing capital only in assets that, after prudent assessment, offer attractive returns that are well above cost of capital. The company must balance the use of capital between returns to shareholders and capital expenditure, while aiming to maintain a strong balance sheet with a single A credit rating.
Second was the improvement of performance at existing businesses, Walsh added. This involved targeting cumulative cash cost savings of more than US$5 billion by the end of 2014; reducing capital expenditure on approved and sustaining projects to approximately US$13 billion in 2013; and lowering exploration and evaluation spending by US$750 million (pre-tax) in 2013 compared with 2012.
The final objective was the delivery of approved growth projects with two significant milestones in 2013: Phase one Pilbara iron ore expansion to 290Mtpa had been accelerated and was now scheduled for completion during the third quarter of 2013, while Phase two expansion to 360Mtpa would be operational by the first half of 2015; and the Oyu Tolgoi copper-gold mine was now being commissioned with first commercial production scheduled by the end of June 2013.
Rio Tinto’s underlying 2012 financial results reflect record iron ore production and shipments and a second half recovery in copper volumes. This was in the context of lower average market prices in 2012 which reduced underlying earnings by US$5.3 billion compared with 2011.
Other features include: underlying earnings1 of US$9.3 billion; a net loss of US$3.0 billion after impairments of US$14.4 billion, primarily relating to aluminium businesses as well as coal assets in Mozambique; and a 15% increase in full year dividend to 167 cents per share.
Source: Rio Tinto. For more information, click here.