Mining giant Rio Tinto PLC (LON:RIO) is looking to generate US$5bn of additional free cash flow over the coming five years, as it looks to ramp up productivity across its US$50bn portfolio of assets.
The productivity drive is part of Rio’s long-term strategy to generate “superior returns” for shareholders by the end of 2021, which will also see it look to trim its cash costs by US$2bn across this year and next.
“A relentless focus on generating cash, together with capital discipline - prioritising value over volume - means that investors can expect us to deliver superior shareholder returns whilst continuing to invest through the cycle,” said chief executive J-S Jacques.
“We have placed our assets at the heart of the business to drive improved performance and ensure our resilience through the cycle.”
Jacques delivered the speech at an investor seminar in Sydney earlier on, his first public appearance since two top executives departed following an internal probe into payments given to a consultant with regards to its iron ore project in Guinea.
Within the presentation, the boss cut guidance on expected capital expenditure for this year to less than US$3.5bn, with guidance for US$5.5bn, $5bn and $5.5bn in 2017, 2018 and 2019 respectively.
Meanwhile, following the US$410mln sale of its UK aluminium assets yesterday, divestments have totalled US$1.3bn in the year so far.
Since 2013, Rio has hived off more than US$5bn worth of assets, with Jacques adding that the company will continue to “reshape [its] portfolio”.
Over the longer-term, Rio told investors that exploration remains the priority for the group as investment in exploration continues in 17 countries and eight commodities.
Rio maintained its Pilbara shipment guidance for 2017 of between 330mln and 340mln tonnes of iron ore.
It also announced aluminium production guidance of between 3.5mln and 3.7mln tonnes for 2017 as well as 8mln-8.2mln tonnes of alumina and between 48mln and 50mln tonnes of bauxite.
This compares against recently updated 2016 guidance for 3.6mln tonnes of aluminium, 7.8mln tonnes of alumina and 47mln tonnes for bauxite.
Shares were broadly flat at £31.