Rio Tinto lowers China growth forecast
Rio Tinto Group, the world's third- biggest mining company, will deepen cost cutting efforts, saying it has lowered its estimates for China's economic growth to below 8 per cent and become more cautious in outlook.
"Significant stimulus efforts have been announced in China, the US and Europe, but it's uncertain exactly when we will see the impact of these on our markets," Tom Albanese, chief executive officer of London-based Rio Tinto, said today in a statement.
"Given this, and the considerable price fluctuations in recent times, we are somewhat more cautious on the outlook over the next few quarters."
China, the world's biggest metals consumer, announced new spending plans last month to help boost its economy, after growth cooled to the slowest pace in three years.
Rio, alongside other mining companies, has pulled back from projects after sluggish growth globally reduced demand for commodities including iron ore and coal.
The company plans further reductions in operating, evaluation and sustaining capital costs across its operations, saying today it's already cut service and support costs by $500 million a year. Capital spending on projects already approved is expected to peak this year, the company said.
Rio reported a 22 per cent drop in first-half earnings in August. "We have the flexibility to phase our investment projects and a disciplined and rigorous approach to capital allocation," Mr Albanese said in to the statement.
Rio rose 1.5 per cent to A$55.70 at the close of trading in Sydney before the statement was released.