Credit Suisse sees upside to cost-cutting targets at Rio Tinto

7th Jul 2014 09:24

Credit Suisse has repeated its 'outperform' stance on diversified miner Rio Tinto, giving an optimistic outlook on cash generation and cost cutting.A 4,000p target price was maintained for the bank's "Focus List" stock.After a tour of Rio's North American operations, Credit Suisse said it "revealed a relentless free-cash-flow (FCF) focus that goes well beyond the dominance of the Western Australian iron ore business"."As a result, we see near-term upside to FCF generation and the $3bn/year cost cutting target."Credit Suisse said the recent appointment of former-BP exec Alfredo Barrios as head of aluminium operations "should be a line in the sand" for the Alcan business to increase earnings momentum.The division's South of Embley bauxite project in Australia is seen as the next medium-term investment for the company, which could increase the bank's estimated value of Alcan by 30% to $1.5bn.Credit Suisse highlighted Rio's second-quarter production update on July 16th and first-half results on August 7th as potential catalysts for the stock.Rio was trading 0.7% lower at 3,264p by 09:19 on Monday.BC