- Producer had estimated 2016 spend at less than $6 billion
- Company says it's well positioned for shareholder returns
Rio Tinto Group, the second-largest mining company, cut its capital expenditure forecast for 2016 as the producer strives to balance shareholder returns with investing in projects.
Capital spending will be about $5 billion in 2016, down from the company’s previous estimate of less than $6 billion, Rio said Tuesday in a statement. Spending this year is seen at $5 billion, from a previous estimate of about $5.5 billion. It was about $8 billion in 2014, according to filings.
“As we approach the start of 2016, we are well positioned to continue to provide returns for our shareholders and invest in our business,” Chief Executive Officer Sam Walsh said in the statement. Rio last month approved a $1.9 billion investment in a bauxite project in Australia.
The biggest mining companies, including Rio and BHP Billiton Ltd. are slashing spending and cutting costs in an attempt to protect profits as commodities prices slide. China’s slowest pace of economic growth in a quarter of a century is weighing on metals to energy prices and eroding profits for producers. Prices this month touched the lowest since 1999 and the Bloomberg Commodity Index is heading for the fifth straight annual loss.