Rio Tinto vows to cut costs as it posts $3bn loss

RIO TINTO chief executive Sam Walsh promised to cut costs and spend capital more carefully this year, as the miner slumped to a full-year loss of $3bn (£1.9bn).

Walsh, who was appointed chief executive in January after former boss Tom Albanese resigned on a $14.4bn write-down on two failed acquisitions, said the company would have an “unrelenting focus” on pursuing value for shareholders.

The miner said it would target cost savings of $5bn by the end of 2014.

Over the full year, Rio Tinto plunged to a loss of $2.99bn, a drop of 151 per cent from 2011’s profit of $5.83bn, reflecting the write-downs on its Alcan aluminium takeover in 2007 and a coal acquisition in Mozambique.

Underlying earnings over the full year fell 40 per cent to $9.3bn, on the back of weaker commodity prices.

Despite the lower result, Rio Tinto pledged a 15 per cent rise in the dividend to $1.67 a share, which was more than expected.

Separately, Andrew Harding has been appointed as chief executive of the iron ore division, replacing veteran miner Walsh who became chief executive in January.

Jean-Sebastien Jacques has been appointed chief executive of the copper division to replace Harding.

Cailey Barker, analyst at Numis Securities, hailed the results as “slightly positive”.

Rio Tinto looks like “the pick of the bunch here”, he added, “but it needs to come back from the write-down and get the new chief executive bedded in”.

Investors were not too deterred by the loss, and shares closed down 0.31 per cent at 3,745.5p.