24 Nov Rio Tinto plans $5 billion productivity push
Rio Tinto (ASX:RIO) plans to generate US$5 billion of additional free cash flow over the next five years in a bid to drive productivity.
The Australian mining giant will focus on safety, cash generation, building a world class portfolio, commitment to capital discipline and delivery of superior shareholder returns to achieve the target.
Rio intends to increase productivity across its gargantuan $50 billion portfolio by targeting operational excellence to generate shareholder returns through the cycle.
Jean-Sébastien Jacques, Rio Tinto CEO, expects the strategy to generate $5 billion free cash flow by 2021 in addition to the cash cost reduction target of $2 billion across 2016 and 2017.
“Our strategy plays to our strengths: world-class assets, a strong balance sheet along with commercial and operating excellence,” said Jacques.
“A relentless focus on generating cash, together with capital discipline – prioritising value over volume – means that investors can expect us to deliver superior shareholder returns whilst continuing to invest through the cycle. We have the right team and performance culture in place to deliver this strategy.”
The diversified mining firm will continue to reshape its portfolio, following the recent $410 million sale of the Lochaber smelter in Scotland. Rio’s total of agreed divestments in 2016 stands at $1.3 billion.
“We have placed our assets at the heart of the business to drive improved performance and ensure our resilience through the cycle. We are well on track to meet our target of $2 billion of cash cost savings by the end of next year,” added Jacques.