SINGAPORE Global miner
Rio Tinto Plc posted its first-ever full-year loss in 2012
after taking a $14.4-billion impairment charge related to its
aluminum business and its coal assets in Mozambique.
"We are deeply disappointed by
the $14.36-billion write-downs that we have taken in 2012,
primarily in our aluminum and energy businesses, which led to
the group recording a net loss of $2.99 billion," chairman Jan
du Plessis said in a statement Feb. 14. In contrast, the miner
posted net income of $5.83 billion in 2011.
Rio Tintos consolidated
sales revenue fell to $50.97 billion in 2012, down 15.8 percent
from $60.54 billion in 2011, and its net debt more than doubled
to $19.3 billion.
The company was hurt by lower
average market prices for commodities only partly offset by
"In 2012, we generated strong
margins in copper, iron ore and minerals, reflecting our
industry-leading positions in each sector," chief executive
officer Sam Walsh said.
Rio Tintos iron ore
business, which Walsh led until January, generated earnings of
$9.25 billion in 2012, down 30.3 percent from $13.27 billion
the previous year. Earnings by its aluminum segment plunged to
just $3 million from $442 million in 2011, copper earnings fell
43.5 percent to $1.09 billion from $1.93 billion and energy
segment earnings tumbled 73.6 percent to $283 million from
In response, the company plans
to slash costs by more than $5 billion by the end of 2014 and
cut capital expenditures on approved and sustaining projects to
about $13 billion in 2013. In addition, Walsh said the company
hopes to garner "significant cash proceeds" by selling its
noncore assets, such as the companys Pacific Aluminium
and diamond businesses, which have been on the block for more
than a year.
"We are optimizing our future
capital allocation by prioritizing and investing in only the
highest-returning projects," he said. "Our major capital
projects in copper and iron ore continue in line with
expectations and are poised to deliver additional volumes this
Walsh said he expects "the
positive momentum in the fourth quarter" of 2012 to carry over
into 2013, in part because he sees Chinese gross domestic
product growth once again rising above 8 percent. However, he
noted that market uncertainty and price volatility likely would
persist "as long as the structural issues in Europe and the
United States remain unresolved."
Rio Tinto announced that the
phase-one expansion of its Pilbara iron ore project in
Australia has been accelerated and is now slated for completion
in the third quarter of 2013, with the phase-two expansion to
360 million tonnes per year expected to be operational by the
first half of 2015.
In addition, commissioning of
the Oyu Tolgoi copper-gold mine in Mongolia is underway, with
first commercial production scheduled before the end of June
2013, the company said.
Rio Tinto said it expects to
produce about 265 million tonnes of iron ore from its global
operations in Australia and Canada in 2013, while
Montreal-based Rio Tinto Alcan Inc. expects to produce 34
million tonnes of bauxite, 8.2 million tonnes of alumina and
2.5 million tonnes of aluminum, excluding Pacific Aluminium and
other aluminum assets the company has marked for divestment or
A version of this article was first published by AMM sister
publication Metal Bulletin.