RIO TINTO
POSTS FIRST LOSS, PAYS NO MINING TAX. Rio Tinto has posted its first loss under
its current corporate structure after recently writing $US14.4 billion off the
value of some of its assets.
The world's third biggest mining company reported a $US3
billion loss for 2012, down from a $US5.8 billion profit the year before.
However, the loss was due to $US14.4 billion worth of write-downs in the value
of its aluminium and coal businesses.
Excluding
those one-off write-downs, Rio recorded underlying earnings of $US9.3 billion,
which is down 40 per cent on last year's underlying result, but slightly ahead
of average analyst expectations which centred on a result around $US9.1
billion.
The size
of the write-downs, particularly those related to Rio's recently acquired
Mozambique coal project, saw the departure of Tom Albanese as the company's
chief executive. His replacement Sam Walsh, the former head of Rio's Australian
iron ore operations, says he will be more conservative about new projects and
acquisitions.
Former Rio Tinto CEO Tom Albanese. |
"We are reinforcing our capital allocation processes,
and will only invest in assets that, after prudent assessment, offer attractive
returns that are well above our cost of capital, and which offer a superior
return when compared to returning cash to shareholders."
Mr Walsh
has also reiterated the company's plan to slash costs at its existing mines.
"Throughout 2013 and 2014 we will seek to enhance
margins at our existing businesses by unlocking substantial productivity
improvements, aggressively reducing costs and better managing our sustaining
capital," he said.
"We are targeting cumulative cash cost savings of more
than $US5 billion to be achieved over the next two years, equivalent to an
annual run rate of $US3 billion by 2014, assuming stable market and operating
conditions, with significant additional cash savings in sustaining capital
expenditure and exploration and evaluation spend."
No MRRT (Mining Super Tax) paid
Mr Walsh
also told reporters that he was aware of the controversy about Australia's Minerals Resource Rent Tax
(MRRT), which raised only $126 million in the six months to the end of December,
well off a previous Treasury forecast of $2 billion.
For the
first time, Rio Tinto has confirmed that it did not pay MRRT in 2012. "Given that the MRRT is a tax that
kicks in when prices are high, you certainly won't expect to have an MRRT liability
when commodity prices are low," Mr Walsh said.
"Accordingly, we paid no MRRT in respect of the year
ended December 31, 2012."
Rio's
boss says the tax is functioning as it was designed, which is to tax
"super profits" not "normal profits", and the company was
already paying its fair share.
"Rio Tinto is one of the highest taxpayers in Australia.
In 2011 I understand that we were the highest taxpayer in Australia," he said. "Our tax
payments per annum are around $7 billion."
Despite
Rio's fall in earnings, it has increased its total dividends for the year by 15
per cent to $US1.67 a share, fully franked, ahead of analyst expectations which
were for a dividend around $US1.60.