Photo by: Bloombeg
PERTH (miningweekly.com) – Falling commodity prices have slashed mining major Rio Tinto’s revenues and underlying earnings for the first half of 2015.
The miner on Thursday reported a 43% decline in underlying earnings to $2.9-billion for the six months to June 30, compared with the $5.1-billion reported in the previous corresponding period.
Revenue for the interim period also declined to $18-billion, which the miner said reflected a $7.1-billion reduction owing to the decline in commodity prices.
“This is a robust set of results, given the tough operating environment,” said Rio CEO Sam Walsh.
“Tier one assets and sound operating capability have delivered stable margins with underlying earnings of $2.9-billion. Post-tax operating cash flows of $4.4-billion more than covered our sustaining capital expenditure (capex) of $1.2-billion and dividend payments of $2.2-billion,” he added.
He noted that Rio’s continued focus on financial and operating discipline had delivered a cost saving of $641-million during the first half of the year, representing 85% of the company’s original full-year target, which the company had now increased from $750-million to $1-billion.
Capex would decline to around $5.5-billion for the full year and would be less than the $6-billion and $7-billion Rio expected to spend in 2016 and 2017 respectively.
“We continue to invest in growth and have reached key milestones in three of our growth projects with the expansion of our Pilbara iron-ore infrastructure, first production from our expanded Kitimat aluminium smelter and an agreement to progress the development of the Oyu Tolgoi underground copper mine,” Walsh said.
During the interim period, Rio reported a number of volume increases from its production portfolio, including its Pilbara iron-ore operations, its bauxite operations and its thermal coal operations.
The volume increases enhanced earnings by some $79-million compared with the 2014 half-year, but this was offset by volume declines in copper, mainly at the Kennecott Utah plant, where the current focus was on de-weighting and dewatering the east wall of the Bingham Canyon, and in titanium dioxide feedstock, where production continued to be aligned with market demand.
“The early and decisive actions we started taking in 2013 provide a strong base for the business. Our low level of absolute net debt and gearing allow us to maintain our commitment to capital returns in 2015, with $3.2-billion returned to shareholders in the first half through our progressive dividend and ongoing share buy-back programme,” Walsh said.