Rio Tinto rubbishes merger talks, boasts shareholder returns

Rio Tinto is on a journey to woo investors, with a presentation in London overnight highlighting the company’s shareholder returns.

The company started the marketing campaign in Sydney last week when it told investors of the strength of its iron ore portfolio.

In London, Rio CEO Sam Walsh also touched on the company’s aluminium, copper and diamond divisions stating the company’s “sector-leading tier one assets” would “materially increase cash returns to shareholders in a sustainable way from February 2015”.

“When you look at EBITDA margins, the quality and longevity of resources and reserves and potential for expansion and growth, there is no question our world-class assets will generate sustainable returns for decades to come,” Walsh said.

“There is a clear focus behind everything we are doing. Looking out over the next five years, we expect to generate strong free cash flow and we remain committed to materially increase cash returns to shareholders. I look forward to announcing this at our annual results in February.”

The optimistic comments come at the same time as Walsh rubbished talks of a merger with Glencore, SMH reported.

"Let me just reassure you… we are not looking at any major mergers or acquisitions," Walsh said.

"We are not going to do something stupid."

The comments come after media speculation that Rio was eyeing an asset merger. Speculation around a possible deal has been rife since Glencore revealed it made a play for Rio in July.

Rio’s board unanimously rejected the approach.

Walsh said he didn’t object to making deals, but said any offer would have to respect the value of Rio’s assets.

"There are no sacred cows, if anybody, including Glencore want to come and make an offer that recognises the true value of assets and recognises that there are synergies that would apply to combining the assets then of course we will look at it," he said.