Rio Tinto to double capex to over $5 billion in 2010

Rio Tinto, the world's third-largest miner will spend a minimum $5 billion in capital expenditure in 2010, with a potential to rise to $6 billion, which is more than double the previously envisaged $2.5 billion, gearing up for the revival of the commodities market.

The Anglo-Australian miner said that its capital expenditure in 2009 will be approximately $5 billion and the company will continue with its strategy of investing in and operating large, long term cost competitive mining operations rather than businesses driven by choice of commodities. 

The company has not disclosed the details of the expenses although it indicated that $2.5-3.5 billion would be spent on growth projects.

Rio Tinto is a leading international mining group headquartered in the UK, combining London-based Rio Tinto plc and Melbourne-based Rio Tinto Limited.

The mining major, which carried a heavy debt burden of $38 billion following its acquisition of Canadian aluminum miner Alcan Inc in 2007, successfully completed a large $15.2 billion rights issue in July that helped to cut its debt by 42 per cent to $22.3 billion as at the end of the third quarter. (See: Rio Tinto pulls a coup with rights issue)

Rio Tinto chief executive Tom Albanese said: "Since the start of the year we have recapitalised the balance sheet and taken decisive action to reduce operating costs and respond to the sharp decline in global economic conditions.  We have emerged from these challenges a stronger business. Coupled with early signs of economic recovery, we are now well-placed to look ahead to 2010 and beyond."

The miner said its plans to reduce operating costs by $2.5 billion in 2010 are on track. Further, the company is working on augmenting its iron ore production capacity from Australia's Pilbara region to 330 million tonnes per annum by 2012, from the 320 million tonnes planned earlier.
"I also look forward to completing the Western Australian iron ore production joint venture with BHP Billiton and unlocking substantial synergies for shareholders," Albanese added.