rio tinto to spend $us5b on growth

Rio Tinto to spend $US5b on growth

30/10/2009 7:41:49 PM

Mining giant Rio Tinto Ltd has more than doubled its calendar 2010 capital expenditure budget in a sign that global commodities demand is set to rebound strongly in coming years.

Rio Tinto's capital expenditure budget for 2010 is now between $US5 billion ($A5.48 billion) and $US6 billion ($A6.5 billion), up from about $US2.5 billion ($A2.74 billion) previously.

The miner said in a statement ahead of its annual investor seminar in London on Friday that next year it would spend "at least $US5 billion with the potential to rise to $6 billion" including $US2.5 billion to $US3.5 billion ($A3.8 billion) on growth projects.

"Previous guidance for 2010 indicated capital expenditure would be reduced towards sustaining levels at around $US2.5 billion," the mining giant said.

"Operating cost savings are on track for the targeted $US2.5 billion reduction in 2010."

Chief executive Tom Albanese said the mining giant would position itself for the expected recovery in commodities demand growth over the longer term through a "focus on disciplined capital expenditure on premier growth options".

Rio Tinto also on Friday advised that it had lifted its production expansion target for iron ore mines in Western Australia's Pilbara region to 330 million tonnes per annum (Mtpa), up from 320mtpa.

The mining giant previously said it would hit 320Mtpa by 2012 but did not indicate in the statement whether it planned to meet the 330Mtpa target that same year.

"Planning work is continuing for iron ore expansion studies in the Pilbara," it said.

Mr Albanese said he looked forward to completing the Pilbara iron ore joint venture with BHP Billiton Ltd, which was expected to be complete by mid-2010.

Rio Tinto's net debt at the end of September was $US22.3 billion ($A24.4 billion), down 42 per cent from $US38.7 billion ($A42.4 billion) at the start of the calendar year.

"We will continue our programme of cost reduction and debt repayments," Mr Albanese said.

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