Rio Tinto has announced massive spending cuts. The world’s second biggest mining group plans to slash costs by 5.4 billion euro over the next two years.
The operating costs will be cut by 3.85 billlion euro until 2014. In addition, Rio Tinto is aiming to reduce its spending on exploration by up to 1.5 billion euro.
The management admits that there will be layoffs, but declines to say how many jobs it will cut and when.
Rio Tinto cites three reasons for the move: slowing global demand, an increase in production costs, and a fall in commodity prices.
But there is an exception – iron ore production. It is the company’s most profitable unit and apparently the most promising.
Next year the company plans to increase iron ore production capacity to 290 million tons up to 360 millions tons by 2015.