Rio Tinto share price: Miner commits to further cost cuts
Rio Tinto (LON:RIO) has vowed to stay focused on cost reductions amid “continued bumps” in its key iron ore market. Speaking at the company’s annual general meeting in London yesterday, chief executive Sam Walsh noted that compared to the 2012 base, the Anglo-Australian miner has reduced its annual operating cash costs and evaluation spend by $4.8 billion.The group has now set a target for a further $750 million cost reduction this year. Walsh stressed that amid current low commodity prices, Rio “has to do more to do to ensure that we maintain the margin between ourselves and the high-cost producers”.
Rio Tinto is the world’s lowest-cost iron ore supplier and makes most if its profit from the steelmaking ingredient. Its cost to produce each tonne of iron ore has fallen from an average of $19.50 a tonne in 2014 to around $17 a tonne this year. With iron ore languishing about $50 a tonne, the FTSE 100-listed company is hoping to lower this figure further. “Being the lowest-cost producer is not about a competition, or a bid to secure bragging rights. Rather, it’s fundamental to the health of our business,” he added.
Rio Tinto Chairman Jan du Plessis further noted that despite the challenging headwinds last year, the company had delivered underlying earnings of $9.3 billion. He told the group’s AGM yesterday that with a sound balance sheet, Rio Tinto had the capacity to weather difficult market conditions, fund future growth and also reward shareholders.
Rio Tinto’s share price plunged yesterday, closing more than two percent lower at 2,842.00p. The stock has declined just over five percent since the beginning of the year.
As of 08:13 BST, Friday, 17 April, Rio Tinto plc share price is 2,842.00p.
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