Anglo-Australian miner Rio Tinto has announced fresh cuts to its spending plans as it joins its peers in the mining sector in reducing costs in the face of sinking commodity prices.
The FTSE 100 company will slash another $1.5bn (£1bn) from capital expenditure over the next two years, revising down forecasts it gave at its half-year results in August.
Capital spending for 2015 will now be $5bn, down from a previously announced $5.5bn. Spending for the following year will also be around $5bn, reduced from a forecast of $6bn.
Iron ore, which provides the lion’s share of Rio’s profits, sank below $40 a tonne on Monday for the first time since spot prices were introduced in 2008 – close to what many analysts believe to be break-even point for many miners.
Rio is the world’s second largest producer of iron ore, mining 295.4 million tonnes last year. It is still looking to raise its production targets, however, aiming for 360 million tonnes by 2017.
“With all of our investment decisions framed by the need to deliver value for shareholders, we have remained focused on investing in only the best quality projects,” said Sam Walsh, Rio Tinto chief executive.
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