Rio Tinto has gone “back to the future” under Sam Walsh’s leadership, the miner’s chief executive has told shareholders at the company’s London AGM.
Chief executive Sam Walsh says since taking over the reins of Australia’s biggest producer of iron ore he has been “taking Rio Tinto back to the future”.
Over the past 12 months Rio has worked to boost production from its global mines, slashed operating costs and sold non-core assets.
“This time last year I set out our plan to transform Rio Tinto into a company once again driven by creating greater value for our shareholders,” Mr Walsh told the company’s annual general meeting in London.
“Upon reflection I have termed our journey over the past year as ‘taking Rio Tinto back to the future’.
“And our financial results indicate that we are moving in the right direction.”
Mr Walsh, addressing his second London AGM as chief executive, told shareholders Rio was now stronger, leaner and more determined.
The miner was working to ensure the changes were sustainable.
Earlier on Tuesday, the world’s second largest miner and iron ore producer blamed cyclone Christine in the Pilbara for affecting March quarter production which totalled 66.4 million tonnes of iron ore.
That was six per cent lower than in the final three months of 2013 but still a record high for a first quarter and up eight per cent on a year ago.
Rio Tinto completed five major projects during 2013 which Mr Walsh said had already started to deliver results.
They included the first phase of the Pilbara iron ore expansion in Western Australia, shipment of copper concentrate from the Oyu Tolgoi mine in Mongolia and the extension and expansion of the Kestrel coal mine in Queensland.
There was also the move from open pit to underground mining at Argyle diamonds in Western Australia while in September the first hot metal was produced from the AP60 plant in Quebec.
“Of course we can always make improvements in everything that we do, including project delivery,” Mr Walsh said on Tuesday.
“However, the five capital projects we have delivered will support our continued growth in the years to come.”
Mr Walsh said Rio’s “breakthrough” iron ore expansion to 360 million tonnes a year was an “exciting opportunity to grow our industry-leading iron ore operation in the Pilbara”.
The chief executive said it would save more than US$3 billion of capital compared with previous plans.
There were also “significant options for growth in our copper business”, he said.
Rio relies heavily on iron ore sales to China and chairman Jan du Plessis on Tuesday admitted there was continued market uncertainty.
Rio expects some variability in the near term as Chinese authorities try to steer the economy along a more sustainable and steady path of growth, the chairman told shareholders.
“There is no question, however, that the Chinese leadership remains committed to pursuing economic reform which offers potential benefits for the global economy in the long term, even if there is some variability along the way,” Mr du Plessis said.
“This backdrop of continued market uncertainty makes it even more important that we execute our strategy well, locking in the changes and improvements we have made, and making them sustainable over the long term.”
The chairman said global financial markets were volatile in 2013, and while the outlook was now brighter in some parts of the world, Rio believed volatility would remain in the short to medium term.
Mr du Plessis said tensions remained in Europe where the pace of reform and structural re-adjustments was slow.
“The combination of low interest rates, low growth and low inflation leaves that continent with considerable challenges,” he said.
In the United States the unwinding of quantitative easing represented “uncharted territory”.
Mr du Plessis told Tuesday’s meeting he was pleased that $US2.5 billion ($A2.66 billion) in proceeds from divestments, together with improved cash generation in 2013, resulted in net debt falling to $US18.1 billion at year’s end.
“Our focus for 2014 will be to continue to pay down debt and further strengthen the balance sheet and I expect net debt to fall further during the course of the year,” he said.
“The discipline of returning cash to investors is an important part of our strategy.”