Rio Tinto (LON:RIO) plans to boost its free cash flow by $5 billion over the next five years, the blue-chip miner has said. The comments come after the Anglo-Australian group sacked two executives last week following an internal investigation into a $10.5-million payment related to an iron-ore mine in Africa.
Rio Tinto’s share price has lost ground in London this morning, having shed 0.53 percent to 3,083.00p as of 08:26 GMT. The decline is largely in line with losses in the broader market, with the benchmark FTSE 100 index currently 0.37 percent worse off at 6,792.54 points. The group’s shares have gained more than 35 percent over the past year, and are up by some 55 percent in the year-to-date.
Rio Tinto announced in a statement this morning that it had committed to generating $5 billion of additional free cash flow over the next five years from a productivity drive. The company, which continues to battle the lower commodity prices environment alongside peers, further said that it now expected its capital expenditure to be less than $3.5 billion this year, as compared with a previous guidance of $4 billion.
“We are well on track to meet our target of $2 billion of cash cost savings by the end of next year,” the group’s chief executive J-S Jacques said in the statement. “Lifting the productivity on our $50 billion asset base creates a low risk and highly attractive return. It will deliver an additional $5 billion of free cash flow over the next five years.”
The strategy update comes after Rio Tinto disclosed last week that it had fired Energy & Minerals chief executive Alan Davies and Legal & Regulatory Affairs Group executive Debra Valentine following an internal investigation into $10.5 million in payments in 2011 to an advisor who helped it secure mining rights for the Simandou iron ore project in Guinea.