- Divestments to help miner generate $5-$10 billion
- Miner sees $650 mln in productivity benefits in first 3 months
- Trott declines to specify scale of job cuts
MELBOURNE/LONDON Dec 4 (Reuters) - Rio Tinto CEO Simon Trott outlined a plan to focus on divestments and productivity growth at his first strategy day on Thursday as he takes steps to simplify the structure of the world's largest iron ore miner.
Investors have been waiting for the details since Rio Tinto announced in August it would streamline its business to three core units from four and focus on profitable assets. Assets up for sale include Rio's titanium and borates businesses.
Rio Tinto has undertaken a thorough review of its global assets and identified some that it does not need to own, Trott told a media call.
"Across each of our three product groups: copper, aluminium, lithium, and iron ore, we've got really good growth projects and they need to compete for capital so we choose the very best of those whilst making sure we maintain our existing assets," he said.
Rio Tinto has identified $5 billion to $10 billion it could generate through divestments and other measures including for land, infrastructure, mining and processing assets, for which it is also exploring commercial partnership options, the miner said in a statement.
It also said there would be a 4% cut in unit costs from 2024 to 2030.
Rio Tinto announced $650 million in annualised productivity gains and cost savings, with $370 million already realised and the balance to be delivered in the first quarter. Trott said the figure included headcount reductions, but declined to detail how many jobs would be cut.
"It's a decent release," said RBC, adding it was not expecting a strong market reaction. Shares opened up more than 2% in London.
Rio also said capital discipline, rising prices for its commodities and 20% growth in copper production could help boost its earnings by as much as half by the end of the decade.
Strategic reviews of iron and titanium, and borates are advancing "as planned," Trott said, with the next phase focused on testing the market for these assets.
The miner also raised its 2025 copper production forecast, citing a ramp-up of operations at its Oyu Tolgoi project in Mongolia.
Rio said it now expects this year's copper production to be between 860,000 and 875,000 metric tons on a consolidated basis, compared with its previous forecast of 780,000 to 850,000 tons. It expects copper production between 800,000 and 870,000 tons in 2026.
While Rio Tinto's profits primarily stem from iron ore, the miner is shifting its focus towards copper, aiming to produce 1 million tons of copper a year by 2030.
Copper prices have reached record levels and the commodity is expected to be in high demand as the world adopts greener forms of energy.
Rio said it remains on track to boost copper output at Oyu Tolgoi by more than 50% this year and by about 15% in 2026.
Reporting by Himanshi Akhand & Rajasik Mukherjee in Bengaluru; Editing by Subhranshu Sahu and Kate Mayberry
Source: Reuters