Rio still swinging axe as prices plunge

MINING giant Rio Tinto took an axe to its costs again as it battled tumbling commodity prices.

Further drastic cuts included a cut in capital expenditure to around £3.5bn, less than half what it was spending three years ago.

Chief executive Sam Walsh defended further cuts. He said: ‘I worked in the car industry at Nissan and I learnt that whatever you can do, you can improve it.’

He said its decision to start the cutting helped and added: ‘The early and decisive actions we started taking in 2013 provide a strong base for the business.’

Walsh said Rio had reduced staff in London from 600 to 250.

The cost and job slashing came as the firm revealed a 43pc fall in first half profit to £1.85bn.

Concerns about China’s growth have hit already weak metal prices. China is the biggest consumer of commodities such as iron ore – made to make steel for the construction industry – and copper. Both metal prices are at six-year lows.

The bulk of Rio’s business is in iron ore where it generates the majority of is profits.

There was a 50pc fall in iron ore earnings and half year revenue fell £4.1bn to £11.5bn compared to the same period last year. Rio will increase its dividend which rose by 12pc to 107.5c (69.3p) and continued share buyback plans, returning £2bn to shareholders. Shares rose 8p to 2575p.