Walsh not satisfied with Rio coal mines

WHILE there is more attention on its iron ore cost margins, Rio Tinto has also promised to lower costs at its Australian coal mines.
Walsh not satisfied with Rio coal mines Walsh not satisfied with Rio coal mines Walsh not satisfied with Rio coal mines Walsh not satisfied with Rio coal mines Walsh not satisfied with Rio coal mines

Rio Tinto CEO Sam Walsh. Copyright Rio Tinto 2014

Blair Price

“Visiting our operations gives us real insights into the pool of management talent across the company and into the challenges faced on the front line of our operations,” Rio chairman Jan du Plessis said at the recent annual general meeting in London.

“There is no better example of this than our visit last year to our coal operations in the Hunter Valley of Australia. We saw first-hand the premier position, and the favourable geology, these assets hold in the district.

“It was clear a great deal has been done by a very focused management team to lower costs and improve productivity. As the coal industry continues to face subdued pricing, we will continue to build on this good work.”

Rio CEO Sam Walsh took note of the production records set at the mining giant’s Hail Creek in Queensland’s Bowen Basin and its Hunter Valley operations in New South Wales.

“The aggressive programme of cost and productivity improvements during the past two years, delivered more than $800 million in savings,” he told the AGM.

“Although the coal market continues to be extremely tough, we are focusing on cash generation and cost reductions. Our Australian operations were cash flow positive last year, but we’re not satisfied with the current level of returns on these assets. We are working hard to further improve performance from these businesses.”

Rio and rival BHP Billiton have received various criticisms, including from Western Australia Premier Colin Barnett last year, for growing iron ore and coal production despite the price-falling oversupply in these markets.

Rio’s chairman did not show any concern for such sentiments at the AGM.

“At a time of significant distress for late-entrant and high-cost producers Rio Tinto is in a position of strength,” du Plessis said.

“In times of increased market volatility, investors seek strength, reliability and consistency and, in such times, Rio Tinto thrives.”

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