Rio Tinto outlines new $5bn productivity improvement drive
UK-based mining giant Rio Tinto is planning to boost its productivity in a bid to generate free cash flow of $5bn by the end of 2021.
As part of its long-term strategy, the company intends to improve cash generation and raise productivity across its $50bn portfolio of assets by focusing on improved excellence.
Rio Tinto CEO Jean-Sébastien Jacques said: “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.”
The company, which also has operations in Australia, is planning to undertake $2bn worth of cost reduction plans across during 2016 and 2017.
Jacques added: “We are also taking advantage of any opportunity to generate value from mine through to market.
“Lifting the productivity on our $50bn on asset base creates a low risk and highly attractive return. It will deliver an additional $5bn of free cash flow over the next five years.”
Separately, Rio Tinto has agreed to divest its assets at Lochaber, Scotland to SIMEC for $410m.
The assets considered for sale include Rio Tinto’s 100% stake in Alcan Aluminium which includes the operating smelter, the hydroelectric facilities at Kinlochleven and Lochaber as well as all associated land.
GFG Alliance strategic board executive chairman Sanjeev Gupta said: “This is a significant boost to our renewables portfolio and will be another major step towards reducing our carbon footprint in metals production.
With the deal, Rio Tinto will divest more than $1.3bn worth of assets by the end of 2016.
Image: Rio Tinto’s Lochaber smelter in Scotland. Photo courtesy of Rio Tinto.