Rio Tinto CEO Sam Walsh announced that the company will seek to cut costs as demand for industrial commodities has dropped. The announcement comes as growth in China has slowed more than expected, declining to 7.7% from 7.9% the previous quarter. Slower growth by China, which is the world’s leading importer of iron ore, copper and other industrial commodities, has meant that global demand for these industrial staples has declined. Still, in the long-term, production appears to be more of an issue than demand. In the case of copper, demand is expected to grow by more than 3.2% annually from 2013 to 2025.
Walsh, an Australian citizen, became CEO of Rio Tinto in January after the company announced its first annual loss in the company’s history due to untimely investments. Walsh has been with Rio Tinto since 1991 and prior to that worked in the automotive industry for two decades. Mr. Walsh has wasted little time in making his mark on the company, already laying off hundreds of employees and announcing plans to sell or close “underperforming” copper, coal, and aluminum assets.
In spite of plans to cut costs, Rio Tinto expects to increase production of iron ore to 265 million tons this year.
The company also estimates that its refined copper output will decline by 27% as a result of a collapse of the pit wall of Bingham Canyon mine in Utah.
(Edited from Reuters)