Before a key Aluminium conference in London, Rio Tinto, Australia's mining giant announced that it will be slashing the capital expenditure further next year and beyond. With no recovery in sight for commodities, this is the second time, Rio has announced expenditure.
In August announcement it said that it plans to save $1 billion by cutting costs this year, instead of previous plan of $0.25 billion. And today it announced that capital expenditure this year will be around $5 billion, instead of previously though $5.5 billion. Moreover, in 2016, capital expenditure will be around $5 billion, $1 billion less than previous forecast.
Rio's CEO Sam Walsh, indicated that Rio will only be investing in best quality projects and cut costs to keep balance sheet in check and keep share holders' value.
However, extracting the best of the best ore is quite concerning according to us at FxWirePro, as it steepens the future cost curve for the industry and make the world more prone to price shock.
Despite the plan, amid commodities slide, investors dumped Rio's stock anyway, which dropped -4.29% in Australia and closed at 42.4 A$.
