Rio to cut billions in spending

Mining giant Rio Tinto has will cut over $4 billion in costs over the next two years in response to softening demand in the resources sector.

The company said it planned to reduce its operating and support costs by $4.81 billion by the end of 2014, and exploration and assessment spending would also be cut by $1 billion over the remainder of 2012 and 2013.

Capital expenditure on current projects will also taper off from the current levels set for 2013, and Rio said keeping capex within this margin would save close to $1 billion.

“We are taking further tough action to roll back the unsustainable cost increases of the past few years and are maintaining a relentless focus on improving productivity,” Rio CEO Tom Albanese said in a statement.

Ahead of the company’s investor seminar in Sydney today, Rio said the short term economic outlook for the mining industry was volatile, but it was “guardedly optimistic on China’s prospects”.

The company marked expansions in Pilbara iron ore, and first production at the Oyu Tolgoi copper-gold mine in Mongolia as two key growth areas for 2013.

The continued ramp-up of the Yarwun 2 alumina refinery in Gladstone, which started production in the second half of 2012, was also marked as a key area of growth.

“The longer term picture remains positive, with increasing urbanisation in emerging markets driving strong demand growth across a range of commodities, and a slower supply response from the industry,” the company said.

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