Commodity price volatility is set to continue in the short to medium term and companies need to strengthen assets and move to become low cost operators, Rio Tinto chairman, Jan Du Plessis today said at the company’s annual general meeting in Sydney.
Amidst weaker commodity prices and the company’s waning Aluminium and Mozambican coal assets, Rio posted a net loss of US$3 billion loss with recorded impairments equating to US$14.4 billion, and reduced underlying earnings dropping 40 per cent from 2011 to US$9.3 billion in 2012.
Earlier this year Sam Walsh was named chief executive officer on the back of the company’s “deeply disappointing” financial results which saw former CEO Tom Albanese step down.
Du Plessis said he is confident both Walsh and fellow Australian Chris Lynch will “provide the leadership and impetus” to drive Rio’s future performance.
Rio’s focus will be committed to investment in tier 1 assets that will generate attractive returns and are resilient throughout the economic cycle.
Going forward, Rio has said the allocation of capital will attract “greater discipline across the business”.
Discussing tier 1 investment, Du Plessis affirmed the company’s commitment to the US$3.7 billion expansion of port and rail infrastructure in the Pilbara, which remains on track.
However, Walsh did say that assets which no longer align with the company’s strategy will be divested.
Rio is the largest corporate tax payer in the country, paying almost US$9 billion in corporate tax and royalties in 2012.
Raising the issues of fiscal and regulatory frameworks, Walsh said he expects Australia’s government to maintain a competitive business environment.
“I expect an Australian government to see it in the nation’s best interest to maintain business-friendly investment policies,” he said.
Wash said the recent New South Wales Land and Environment Court decision which overturned Rio Tinto’s Mount Thorley Warkworth mine expansion could compromise “the future of Australian businesses”.