Rio Tinto's cuts are the deepest
Shares in Anglo-Australian giant Rio Tinto (LON:RIO) was trading up in London after the firm said its first-half profit more than doubled, boosted by deep cost cuts and a jump in iron ore production.
Net profit at the company totalled $4.4 billion in the six months through June, compared with $1.72 billion in 2013.
During the first half Rio upped underlying earnings 21% to $5.1 billion versus $4.7 billion consensus forecast, helping it to cut net debt by $1.9 billion in the first half to $16.1 billion.
Tio Tinto said it hit cost-cutting targets of $3 billion six months ahead of the target date, trimming $3.2 billion of operating cash costs since 2012. Further cost reductions is expected to realize a further $1 billion of savings by the end of next year.
Chief Executive Sam Walsh took the top position early in 2013 after leading the company's iron ore division and has been the most aggressive among the top diversified miners to cut costs, dispose of assets and overhaul capital expenditure programs.
Rio Tinto, the world's second-largest producer of iron ore behind Vale SA, upped profits from the division 10% to $4.7 billion in the first half. Iron ore now makes up 92% of the company's profits.
The iron ore price is down 30% this year, trading below $100 on a quarterly basis for the first time since 2009, but soaring production from Rio's Pilbara operations more than offset the slump in the price of the steelmaking ingredient.
Rio Tinto boosted production of iron ore to 139.5 million tonnes during the six months and is on course to up annual production to 290 million tonnes.
CNBC reports Walsh expects 125 million tonnes of high-cost iron ore supply to be taken out of the market this year, as the lower price forces out low-grade Chinese mines and smaller producers cut output.
Aluminum has long been a headache for Rio Tinto after its takeover of Canada's Alcan in 2007 resulted in a $10 billion writedown, but the unit is now showing signs of a turnaround.
Underlying earnings rose 26% from a year earlier to $1.1 billion, despite realized aluminum prices 9% below 2013 resulting in a 74% rise in aluminum profits to $373 million.
Rio said it has completed a review of its smelter in Kitimat, BC and that total approved capital for modernization of the plant now stands at $4.8 billion.
Rio increased its interim dividend by 15% to 96 US cents per share.