Rio Tinto outlines plan to cut costs, raise productivity at strategy day

[MELBOURNE/LONDON] Rio Tinto CEO Simon Trott outlined a plan to focus on divestments and productivity growth at his first strategy day on Thursday (Dec 4) as he takes steps to simplify the structure of the world’s largest iron ore miner.

Investors have been waiting for the details since Rio Tinto announced in August it would streamline its business to three core units from four and focus on profitable assets.

Assets up for sale include Rio’s titanium and borates businesses. Rio Tinto has undertaken a thorough review of its global assets and identified some that it does not need to own, Trott told a media call.

Rio Tinto has identified US$5 billion to US$10 billion it could generate through divestments and other measures including for land, infrastructure, mining and processing assets, for which it is also exploring commercial partnership options, the miner said in a statement.

It also said there would be a 4 per cent cut in unit costs from 2024 to 2030.

Rio Tinto announced US$650 million in annualised productivity gains and cost savings, with US$370 million already realised and the balance to be delivered in the first quarter.

Trott said the figure included headcount reductions, but declined to detail how many jobs would be cut. “It’s a decent release,” said RBC, adding it was not expecting a strong market reaction. Shares opened up more than 2 per cent in London.

Rio also said capital discipline, rising prices for its commodities and 20 per cent growth in copper production could help boost its earnings by as much as half by the end of the decade.

Strategic reviews of iron and titanium, and borates are advancing “as planned,” Trott said, with the next phase focused on testing the market for these assets.

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The miner also raised its 2025 copper production forecast, citing a ramp-up of operations at its Oyu Tolgoi project in Mongolia. Rio said it now expects this year’s copper production to be between 860,000 and 875,000 tonnes on a consolidated basis, compared with its previous forecast of 780,000 to 850,000 tonnes.

It expects copper production between 800,000 and 870,000 tonnes in 2026. While Rio Tinto’s profits primarily stem from iron ore, the miner is shifting its focus towards copper, aiming to produce one million tonnes of copper a year by 2030.

Copper prices have reached record levels and the commodity is expected to be in high demand as the world adopts greener forms of energy.

Rio said it remains on track to boost copper output at Oyu Tolgoi by more than 50 per cent this year and by about 15 per cent in 2026. REUTERS