With a continuing volatile short-term environment, Rio Tinto plans further cost reductions, primarily in operating, evaluation and sustaining capital costs across the business. Its drive to reduce service and support costs has so far produced savings of $500M a year. Total annual capital expenditure on projects already approved is expected to peak in 2012. The short-term macroeconomic outlook remains volatile. Economic growth in China is robust but moderating, and is slow and uneven in developed economies. Rio Tinto expects China's stimulus packages to take effect progressively after the Chinese leadership change and has therefore lowered its estimates for Chinese GDP growth this year to just below eight per cent. Iron ore prices have partially recovered after a period of rapid decline but Rio Tinto expects them to remain volatile in the near future. Rio Tinto's copper production is expected to increase from 2013 as a result of improving grades and investments at Kennecott and Escondida and by the start of production from the Oyu Tolgoi mine in Mongolia. From 2011 to 2015, Rio Tinto expects to achieve a cumulative annual growth rate of 13 per cent for copper.
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