PERTH (miningweekly.com) – Mining major Rio Tinto on Thursday flagged a 5% increase in iron-ore shipments for 2020, compared with 2019, while also deferring $500-million of planned capital expenditure (capex) from 2019 to 2020.

The miner told an investment seminar in London that total capex for 2019 would be $5.5-billion, with the 2020 capex guidance standing at $7-billion.

For 2021, the miner has maintained a capex target of around $6.5-billion, similar to the level expected for 2022.

The miner told investors that Rio remained committed to maintaining an appropriate balance between investment in the business and cash returns to shareholders.

“Over the last three years, our pay-out ratio, excluding returns from divestments, has averaged more than 70%, above our returns policy range of 40% to 60% in recognition of the strong free cash flow generation of the business,” said CEO Jean-Sebastian Jacques.

“Rio Tinto has a world-class portfolio, delivering superior margins and free cash flows, with an established track record of generating resilient returns. This includes $32-billion returned to shareholders since 2016, in a volatile macro environment.

“We are not complacent, and will step up our operational performance to fully optimise our assets and maintain strong cash delivery. We will continue to create value by strengthening relationships with our customers and with other partners, both of which are crucial for our future success."

Meanwhile, Jacques on Thursday said that iron-ore shipments from its Pilbara operations are expected to increase by 5% in 2020, up from the targeted 320-million to 330-million in 2019.

Sustaining capex for the iron-ore operations is now expected to be $1-billion to $1.5-billion per year from 2020, versus earlier guidance of around $1-billion.

Meanwhile, Rio’s head of aluminium, Alf Barrios, has reportedly said that the current power situation in Australia meant that the company’s aluminium assets in the region was not sustainable, given the high prices of electricity.

"The smelters ... do lag internationally competitive prices which undermines the viability of the asset,” Barrios was quoted by Reuters.

He said Rio was speaking with power providers and the government.

“I’m not going to speculate on the outcome but clearly the current situation is not sustainable," he said.

Barrio’s comment comes just days after the miner announced a strategic review of its 79.36% interest in New Zealand’s Aluminium Smelter at Tiwai Point.

The review will determine the operation’s ongoing viability and competitive position, given the challenging short- and medium-term outlook for the aluminium industry on the back of the current market conditions and high energy costs.