Rio walks from plan to sell smelters
RIO Tinto has shelved plans to sell its Australian and New Zealand aluminium business, according to analysts briefed by the company, and the mining giant has warned of a deep hit to its earnings from more expensive aluminium raw materials and coal.
Its plan to keep Pacific Aluminium and the warning on costs were delivered in presentations for investors in North America by aluminium head Alf Barrios.
At its first-half results in August, the miner said it would take a $320 million hit to earnings before interest, tax, depreciation and amortisation.
It was part of cost increases of $US500 million group-wide for raw material and energy. That warning prompted Rio shares to slide. “Raw materials and energy are lifting [the global] cost curve by 16 per cent from 2017,” Mr Barrios said. “Costs are expected to stay elevated in 2019.”
Rio forecast $US400 million of extra caustic soda, coal tar pitch and coke costs over the full-year and $US100 million of increased coal costs. That includes the $US229 million first-half cost hit previously flagged and $US50 million of first-half coal costs.