Rio unfazed as iron ore talks stall
RIO Tinto, the world’s second-largest miner, brushed off fears about a metal pricing stalemate with China as half-year profits slumped due to lower prices. Chief executive Tom Albanese said the group is not overly concerned about deadlocked talks for an iron ore price deal with Chinese steel mills.
“I would hope to get an agreement, but if we don’t, we don’t,” he said.
Albanese said the miner would hold off saying or doing anything that might threaten four of its Chinese staff arrested in July on charges of illegally obtaining commercial secrets.
The three employees and the company’s sales manager in China, Stern Hu, were detained shortly after a deadline passed without a deal in the price negotiations between Chinese steelmakers and miners Rio, BHP Billiton and Vale.
Albanese declined to say whether Rio believed the arrests were connected to the pricing deadlock, although it was supporting the staff.
“We have to respect the legal process in China. We don’t want to do or say anything that will affect their well-being,” he said.
Rio failed to complete a planned $19.5billion (£13billion) investment by Chinese state-owned steel producer Chinalco, instead selling shares and agreeing a joint venture with rival BHP Billiton to cut debt, which stands at about $24billion. Rio was in early stage talks with the Chinese firm about co-operation, Albanese said.
First-half underlying earnings slumped 54 per cent to $2.6billion, in line with market forecasts, as metals prices and demand collapsed.
However the group is confident after axing 16,000 jobs – 15 per cent of its workforce, more than it targeted last December – cutting production in higher-cost operations, paying off nearly 40 per cent of its debt through a $15billion share sale and selling non-core assets like Alcan.
Chairman Jan du Plessis said Rio needed stability after years of upheaval. “We have had enough excitement,” he commented.
