Rio Tinto Group, the world’s second-largest mining company, may focus on copper and bauxite investments from next year with demand forecast to rise in China, the biggest metals consumer.
“This year we are focusing on continuing to pay down debt, to improve the strength of the balance sheet,” Chief Executive Officer Sam Walsh told reporters following the company’s annual meeting in Melbourne. “That brings us to next year and it brings us to options that we are providing the board in relation to how will the future cash flow be used. Clearly it can be used to build the business and grow the business, or it can be used for returns, or both.”
The world’s largest mining companies are reining in capital spending after a decade-long boom in metal prices slowed. Rio is cutting capital spending to about $8 billion in 2015, less than half its outlay in 2012.
“We’ve done the lion’s share of the hard yards,” Walsh said. “You’ve got to be very careful that you don’t start to cut into the muscle of an organization, or even into the bone.”
Rio Tinto’s La Granja copper project in northern Peru and Resolution in Arizona, which may become North America’s largest, “both have the potential to be Tier One assets,” Walsh said in a speech to the meeting. The South of Embley bauxite project in Queensland state is among other favored growth options, he said.
“All of these projects are available to be considered for investment when the time is right,” Walsh said in his speech.