Trott said the company will free up to $10 billion from existing assets through sales, partnerships and lowering the cost of capital to boost its balance sheet.
Trott announced in August the dual-listed London and Australian company will be reorganised into three key divisions – iron ore, copper and a merged lithium and aluminium business – down from four previously.
Rio’s all-important iron ore division has been expanded into the one global unit under Matt Holcz, combining the miner’s flagship Western Australia Pilbara assets with others in Canada and the newly inaugurated Simandou project in Guinea.
“We are building from a position of strength for Rio Tinto’s next chapter, sharpening and simplifying the business to deliver leading returns,” Trott said on Thursday.
The company said it was upgrading guidance for both copper and bauxite production.
Rio makes most of its revenue from digging up iron ore in the Pilbara – and soon adding ore from Guinea – shipping it to China’s blast furnaces to be turned into steel.
The trade has delivered enormous profits for Rio and its rival BHP over recent years, making iron ore one of Australia’s most valuable exports. However, the booming demand from China’s insatiable steel mills is plateauing as the Asian giant struggles to overcome a crisis in its property market, leading to a sharp fall in the price of iron ore this year.
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The commodity is being hemmed in by slim profit margins at China’s mills and ore stockpiles on its wharfs. “With steel inventory also maintaining high levels, the overall iron ore market was expected to come under pressure,” Barrenjoey analysts said in note.
Simandou’s projected output of 60 million tonnes of high-grade iron ore a year by 2028 or 2029 at a time of softening demand from China is also dragging on the commodity’s outlook, although prices are still above the critical $US100 barrier.
The global resources giant is also being caught up in geopolitical change on another front. Rio’s big Canadian aluminum smelters have become a target of the Trump administration’s hostile trade stoush with its largest neighbour, and the metal was hit by an initial 25 per cent tariff later hiked in June to 50 per cent.
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