Rio Tinto will cut costs but says it will maintain iron ore output

Sam Walsh. Dan Kitwood/Getty Images

Outgoing Rio Tinto chief executive Sam Walsh says the giant miner is focused on further cost and productivity improvements in face of volatile prices for commodities.

He was releasing the company’s first quarter operations review, showing global iron ore shipments at 80.8 million tonnes, up 11% on a year ago.

Rio Tinto’s guidance for global iron ore shipments for the year year are unchanged at 350 million tonnes.

“These results demonstrate our commitment to operational excellence in 2016, with notable improvements in several important areas, including a strong performance in Aluminium,” Walsh says.

“However, we continue to experience volatility in commodity prices across all markets.

“In the face of a testing external environment, our focus remains on delivering further cost and productivity improvements, disciplined capital management and maximising free cash flow, to ensure that Rio Tinto remains strong.”

Rio has abandoned its progressive dividend policy in the facing of declining revenue from collapsing commodity prices, mainly caused by slowing demand as China transitions from an industrial economy to one more based on consumption.

Rio Tinto latest full-year underlying earnings were cut almost in half to $US4.54 billion as falling commodity prices, mainly iron ore, continue to crush profitability in the sector. The full-year net loss was $US866 million compared to net earnings the previous year of around $US6.5 billion.

BHP is due tomorrow to release its latest quarter numbers.

Here’s the detail on all Rio Tinto’s first quarter production: