Rio Tinto promises "sustainable cash returns" for shareholders in 2015

28th Nov 2014 07:11

Diversified mining giant Rio Tinto has promised investors that "sustainable cash returns" will be delivered next year, as it highlighted its commitment to capital discipline and shareholder value.At an investor seminar in Sydney, the company said that going forward it would only focus on the projects with the highest returns to drive shareholder value.However, chief executive Sam Walsh admitted that the near-term outlook is "undoubtedly more challenging", with iron ore prices at five-year lows."The group's world-class portfolio of high-quality assets, with industry-leading [operating profit] margins and potential for growth, are positioned to generate strong free cash flow," the company said.In line with this, Rio said it has deferred an investment decision on its proposed billion-dollar greenfield mine, Silvergrass, in the Pilbara region of Australia, until at least the third quarter of 2015 at the earliest.Nevertheless, the miner expressed its confidence in its Pilbara operations and its targeted expansion to produce 360m tonnes of iron ore a year.It said it still remains on track to deliver 330m tonnes in 2015 and 350m by 2017 with extra production coming from brownfields, de-bottlenecking and productivity across the Pilbara mine network."Shareholders stand to benefit from the very considerable value that this will generate," the group said.Walsh said Rio would deliver sustainable cash returns to shareholders "thanks to our superior portfolio of tier one assets, an unrelenting focus on financial discipline and our unquestionable operating and commercial expertise, founded on a culture of safety and integrity".He said: "The delivery of our progressive dividend is a key commitment. Looking out over the next five years, we expect to generate strong free cash flow and we remain committed to materially increase cash returns to shareholders in a sustainable way. I look forward to announcing this at our annual results in February next year."