Rio posts $2.9bn loss

Global miner Rio Tinto has posted a $US2.99 billion ($A2.91 billion) full year net loss, due to $US14.4 billion ($A14.00 billion) in recent writedowns.

The company's underlying earnings fell 40 per cent to $US9.3 billion.

Last month, Rio wrote down its aluminium assets and a coal project in Mozambique, leading to chief executive Tom Albanese's departure.

A tax credit of $US1.3 billion ($A1.26 billion) related to the federal government's mining tax helped lessen the size of the statutory loss.

Miners are able to accumulate the credits and reduce their tax obligations, through controversial accounting adjustments related to the amounts they have invested in existing mines.

The company unveiled plans to slash costs by more than $US5 billion ($A4.86 billion) by the end of 2014.

That includes reducing capital expenditure on approved and sustaining projects to about $US13 billion in 2013 and lowering exploration and evaluation spending by $US750 million ($A728.97 million) (pre-tax) in 2013 compared with 2012.

The large Oyu Tolgoi copper-gold mine in Mongolia now was due to come into first commercial production by the end of June 2013.

Discussions with the government of Mongolia were continuing following a recent dispute.

Rio's new chief executive Sam Walsh said the company's long-held strategy of investing in and operating large, long-life, low-cost mines and businesses would maximise returns for shareholders in a volatile economic environment.

"We are reinforcing our capital allocation processes, and will only invest in assets that, after prudent assessment, offer attractive returns that are well above our cost of capital, and which offer a superior return when compared to returning cash to shareholders," he said in a statement.

"We are also targeting significant cash proceeds from divestments of non-core businesses in 2013."

Mr Walsh said Rio last year generated strong margins in copper, iron ore and minerals.

"But our aluminium and energy businesses faced a deterioration in market conditions coupled with rising costs which we are addressing through our cost saving and value enhancement programs," he said.

"Looking ahead, we see the positive momentum in the fourth quarter of last year being sustained into 2013 with Chinese GDP growth returning to above eight per cent in 2013.

"We expect market uncertainty and price volatility to persist as long as the structural issues in Europe and the United States remain unresolved."

Mr Walsh said Rio would target cash cost savings of more than $5 billion to be achieved over the next two years.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9327-0.0005-0.05%
    AUDUSD=X
    0.5555-0.0003-0.05%
    AUDGBP=X
    0.6753-0.0003-0.05%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg