Australia-based miner Rio Tinto has announced that it plans to generate $5 billion of additional free cash flow over the next five years from a productivity drive as part of its long-term strategy, which is centered around a strong focus on safety, cash generation, a world-class portfolio, commitment to capital discipline and the delivery of superior shareholder returns.
The company stated that it intends to raise productivity across its $50 billion portfolio of assets by focusing on operational excellence to generate superior shareholder returns through the cycle. This is expected to generate a total $5 billion of further free cash flow by the end of 2021 in addition to the cash cost reduction target of $2 billion across 2016 and 2017. The company also stated that it continues to reshape its portfolio. Following the announcement on November 23 that the company will sell its Lochaber aluminum smelter in Scotland for $410 million, the total of agreed divestments in the current year now stands at $1.3 billion.
In addition to improving the performance of its asset base, Rio Tinto is also committed to investing in growing the business, such as the Silvergrass iron ore project in Western Australia with an annual capacity of 20 million mt, which is on track for completion in the second half of 2017.
Meanwhile, the company also stated that its Pilbara iron ore shipment guidance for 2017 remains at 330-340 million mt.