Rio Tinto's New CEO Targets Cost Cuts, Asset Sales in Streamlining Push -- 2nd Update

By Adam Whittaker and Rhiannon Hoyle

Rio Tinto's new chief executive officer said he would cut costs and sell assets in a bid to simplify the business.

Simon Trott, who took the helm of the Anglo-Australian miner in August, used the investor day on Thursday to set out how a simplified business would help achieve his goal of making Rio Tinto the "most valued" metals and mining business.

The plan involves delivering up to $10 billion in cash proceeds from the sale of assets and cutting roles as part of its restructuring.

The world's biggest miners are under pressure to better appeal to investors as the industry becomes dwarfed by fast-growing sectors such as technology and pharmaceuticals. They are also seeking ways to bolster future profits that have long relied on a strong iron-ore market that is widely expected to cool.

Rio Tinto said it has taken actions to deliver $650 million in annualized productivity gains, and said significantly more are targeted. On Wednesday, rival miner Glencore said it had cut around 1,000 jobs as part of a restructuring.

Barclays analyst Amos Fletcher last month said job cuts could support a cost-reduction target of around $1 billion over the next two or three years. RBC Capital Markets analyst Ben Davis estimated a similar goal, noting that Glencore had already outlined its own plans to save that much by the end of 2026.

Trott said his ambition to be the most valued miner isn't purely a financial goal. He said he wants Rio to be the most valued by the communities it operates in, by its employees, and by the market.

The update contained no major strategic shifts, J.P. Morgan analysts wrote in a note to clients. Rio Tinto's London-listed stock was trading up 0.3% in midday trade.

The update comes as some investors have raised concerns about how sprawling its business has become after a string of acquisitions. The company now has up to 20 projects in development and is operating and exploring in more than 30 countries across more than 10 commodities.

Rio Tinto said Thursday that the next phase of the strategic reviews of its iron and titanium business and its borates unit would test the market's appetite for the assets. Trott didn't outline a timeline for selling the assets.

Infrastructure assets, like power stations, could also be disposed off.

One of the biggest questions going into the briefing was how Trott intends to develop Rio's lithium business, much of it acquired via a $6.7 billion takeover of Arcadium Lithium earlier this year.

Other major miners balked at expanding into lithium, used to make batteries, because they didn't envisage it earning them significant profits like the kind they can make producing industrial metal copper or steel ingredient iron ore.

Rio Tinto said it would continue with its existing lithium projects but said additional capital would only be deployed when the returns are sufficient.

Trott had already mothballed a lithium project in Serbia.

Investors hadn't expected Trott to back out of lithium entirely. There was a consensus view that he would refine the company's pipeline of lithium projects, with developments happening more slowly than originally planned.

Meanwhile, Paul Graves, the head of Rio Tinto's lithium business and formerly CEO of Arcadium Lithium, is leaving the company as Trott assembles a core group of leaders. Trott is now running operations under three units--iron ore, aluminum and lithium, and copper--.

A long running question has been how Rio Tinto might resolve shareholder concerns about Chinalco's nearly 15% stake in its London listed stock, which has stopped the company from buying back shares.

Trott said Rio Tinto is actively working with Chinalco on solutions but cautioned that it is going to take time. Some analysts have speculated an asset-for-equity swap could be a possible answer, although some investors say they would prefer Rio Tinto to ask Chinalco to participate in any buyback on a pro rata basis.

The push to cut costs coincides with a paring back of capital expenditure over the medium term, which the miner expects to fall to less than $10 billion a year from 2028 and beyond. Rio Tinto expects to spend around $11 billion over 2025.

Rio Tinto is targeting 7% copper equivalent production growth in 2025 and 3% compound annual production growth through to 2030. It also raised its copper production guidance for 2025, and lowered its unit cost guidance.

It also said its proprietary Nuton bioleaching technology produced its first ever cathode at a U.S. mine last month, and that it will undertake further testing. The Nuton technology relies on microorganisms to extract copper from ores that would traditionally be uneconomical to mine.

Write to Adam Whittaker at [e-mail] and Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

12-04-25 0714ET