AL miner Rio Tinto yesterday cut its growth forecast for China and said it was stepping up efforts to cut costs, having already slashed $500m (£312m), faced with an uncertain global outlook.
Rio Tinto, the world’s second-largest iron ore miner with more than 80 per cent of its earnings in 2012 expected to come from the material, is heavily dependent on Chinese steel demand picking up and is counting on Chinese infrastructure spending plans to drive that demand.
“Significant stimulus efforts have been announced in China, the US and Europe, but it’s uncertain exactly when we will see the impact of these on our markets,” Rio Tinto chief executive Tom Albanese said yesterday. “Given this, and the considerable price fluctuations in recent times, we are somewhat more cautious on the outlook over the next few quarters.”
Rio Tinto slightly cut its forecast for Chinese economic growth to just below eight per cent, in line with the International Monetary Fund’s revised forecast yesterday.
“Economic growth in China is robust but moderating, and is slow and uneven in developed economies,” Rio said in a statement.
Rio also said it has cut $500m in costs so far in service and support roles, and would now target cost cuts in operations, project studies and sustaining capital, predicting that capital spending, forecast at $16bn this year, would peak in 2012.
“We aim to maintain our single A credit rating and are driving our cost reduction efforts harder and faster,” Albanese said.