'Relentless' cost-cutting to continue at Rio: Walsh

By a staff reporter

Rio Tinto Ltd chief executive Sam Walsh has reiterated his committment to a "relentless" cost-cutting drive as continues his push the miner into "a company that’s greatly admired and respected". 

Addressing Rio Tinto shareholders at the group's annual general meeting in Sydney, Mr Walsh said he was targeting cumulative cost savings of $US5 billion over the next two years. 

"This will be achieved through a relentless focus on cost reduction and productivity improvement across all aspects of our business," he said.

Shares in the group fell 1.19 per cent to $58.20 at the 1615 AEST official market close, against a benchmark fall of 0.03 per cent. 

Mr Walsh also said Rio's iron ore expansion plans in the Pilbara were on track, and its Oyu Tolgoi project was due to start shipping to customers in the first half of this year.

"This will depend on the ongoing discussions with the Government of Mongolia, where constructive progress is being made," he said.

Mr Walsh said his long-term goal was to make Rio Tinto "a company that’s even more attractive to investors, a company that customers, suppliers, governments and communities want to partner with, and a company that employees and shareholders are proud to be part of.

"This will enable us to capitalise on the positive long-term demand for our products," he said.

No change to dividend policy: Du Plessis

Meanwhile, chairman Jan Du Plessis has flagged no change to Rio Tinto's current dividend policy and suggested recent volatility in the iron ore price was set to continue.

"Over the last five years we have experienced market volatility unlike anything we have ever seen before," he said.

"A graph of iron ore prices, over the last five years, is a good illustration of the market turbulence that we have seen, and, indeed, continue to see.

"The world is now so interconnected and integrated as a global village, that if one part of the world is destabilised, there is an instant, knock-on effect on other parts."

Australian Shareholders Association's Richard Giles said that his members thought the miner should be paying much higher dividends.

"We believe that you should be moving to a more traditional dividend policy whereby you pay out 60, 70 or 80 per cent of the profits you earn every year as opposed to your so-called progressive policy which over the last five years had paid out only 20 per cent of profits as dividends," he said.