Rio Tinto, the world's second-largest miner, positioned itself for a comeback today after posting a record drop in half-year profit and selling off shares and assets to slash debt.
Rio said it was more confident about the future after cutting a greater than targeted 16,000 jobs, or 15% of its workforce, reducing production at its higher cost operations and paying off almost 40% of its debt.
A key remaining challenge for Rio Tinto, however, is to resolve a stalemate with Chinese steel mills on price talks for iron ore, its biggest earner, amid tension with the Chinese government over the arrest of four staff in Shanghai on suspicion of bribery.
CEO Tom Albanese said that 'Rio Tinto is now a stronger, fitter business and we can now look to the future with a higher level of confidence.'
First-half underlying profit fell 54% to $2.565 billion, matching analysts' forecasts, as metals prices and demand collapsed. Its aluminium business, which it expanded two years ago with the costly takeover of Alcan, slid to a loss of $689m.
Rio Tinto, which lightened its debt burden with recent asset sales and a $15.2 billion share sale, said cost cuts would pay off in the second half and, in a sign of its confidence, said it expected to pay a final dividend.
Albanese said he expected some recovery in western demand in 2010. Rising demand from China, the biggest consumer of many industrial metals, had lifted metal prices from 2008 lows.
That echoed the outlook given last week by bigger rival and former suitor BHP Billiton after it announced its first profit decline in seven years.