Walsh steers Rio to record iron ore output

 
Suzie Neuwirth
RIO TINTO unveiled record iron ore production and shipments, while slashing costs, one year after new chief executive Sam Walsh took the helm.

The FTSE 100 miner said production of iron ore, which makes up around 90 per cent of its earnings, reached 266m tonnes last year, slightly ahead of guidance and up five per cent on 2012.

Rio said it is on track to ramp up iron ore production to 290m tonnes per year by mid-2014.

A number of mining giants have made the decision to expand iron ore production, despite a slowdown in demand from China weighing on commodity prices. Some analysts have suggested that the firms are attempting to use economies of scale to wipe out the smaller competition.

Under new chief executive Sam Walsh, Rio has embarked on a swathe of cost cuts over the past year, including divestment of non-core assets, as it tries to turn around its balance sheet.

Rio said it beat cost cutting targets in 2013, with more than $2bn (£1.2bn) removed from operating expenditure. It reduced exploration and evaluation spending by over $1bn in 2013, exceeding the $750m target set for the year.

The Anglo-Australian firm’s copper unit also benefitted from ramped up production, with the Oyu Tolgoi mine in Mongolia now at full capacity and the Kennecott Utah mine continuing to recover after a landslide. Copper output rose by 15 per cent to 631.5m tonnes in 2013, beating forecasts.

“These are excellent fourth quarter operational results,” said Walsh. Shares closed 2.5 per cent higher.