Rio Tinto Group, the world’s third-largest mining company, will double capital expenditure next year after cutting net debt by 42 percent in the first nine months of this year, the company said in a statement yesterday.
Spending will rise to between US$5 billion and US$6 billion, up from previous guidance of US$2.5 billion, it said ahead of an investor briefing at 2pm in London.
CUTTING COSTS
Net debt dropped to US$22.3 billion at Sept. 30 and the company is on schedule to reduce operating costs by US$2.5 billion next year, Rio Tinto said.
Rio Tinto cut 16,000 jobs, sold assets and curbed spending after the global recession curbed demand for metals. The company also grappled with borrowings that ballooned after its US$38.1 billion purchase of Canadian aluminum producer Alcan Inc in 2007. In June, London-based Rio Tinto spurned a US$19.5 billion investment from Aluminum Corp of China in favor of a US$21 billion share sale and the formation of an iron ore venture with BHP Billiton Ltd.
The funds from the rights offer allowed Rio Tinto to continue with its growth projects, which include the expansion of the Yarwun alumina refinery, the Kestrel coking coal mine and the Clermont thermal coal mine, CEO Tom Albanese said in August.
PRODUCTION
The company is studying increasing iron ore production in Australia’s Pilbara region to 330 million tonnes a year, up from its previous guidance of 320 million tonnes, it said yesterday.
Earlier this month Rio Tinto, the world’s second-largest exporter of iron ore, raised its forecast this year for output of the steelmaking raw material, saying production would increase by as much as 7.5 percent as demand recovers.
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