Top miner Rio Tinto has announced 2013 underlying earnings of $4.2 billion, down 18% reflecting below-average market prices and a higher effective tax rate—both partly offset by record iron ore shipments and cost savings momentum.
Net earnings of $1.7 billion, said company officials, included non-cash exchange losses of $1.9 billion and a $300-million write-off of waste owing to stripping costs and damaged equipment at Kennecott Utah Copper following the pit wall slide at Bingham Canyon in April.
Rio Tinto representatives added that they will continue to seek performance enhancement through cost reductions accentuating $1.5 billion of total cash improvements to date—these include an overall $977 million in improvements and $483 million from lower exploration and evaluation spending in Q1 and Q2 2013.
Rio Tinto CEO Sam Walsh sounded confidence in the company’s progress. “This global economic volatility only serves to highlight the need to build a stronger and more resilient business,” he said. “I believe we are well on track to build a stronger Rio Tinto.”
In addition, Rio Tinto officials have sought a company-wide net staff reduction of 2,200 since Q2, accounting for 1,800 new roles in iron ore to support expansions. Operations performed well with record first half iron ore production, meanwhile, coupled with stronger copper volumes, and recovery at Bingham Canyon advancing faster than previously expected.
Rio Tinto is also moving to strengthen its balance sheet with capital expenditure reductions by 9% to $7 billion; 2013 capital expenditures, meanwhile, are expected at $14 billion, 20% lower than 2012’s peak.
Funding and development of the second phase of underground expansion at the massive copper-gold Oyu Tolgoi project in Mongolia, however, is delayed pending talks with government officials. The open-pit mine and concentrator are in production, however, and are operating at more than 80% of design capacity, said Rio officials.
In Australia, at the same time, phase one Pilbara iron ore expansion to 290 metric tons per year (mt/year) remains on budget and on time to deliver its first tons during Q4 2013. The Argyle diamonds underground mine was also commissioned in Q2 2013.
The Kestrel coking coal mine is in production and ramping up in Q2 of 2013, officials added, while $1.9 billion of non-core business divestments have been announced or completed by the end of Q2 2013.