CEO Walsh Begins Tough Calls to Bring Rio Tinto (ASX: RIO) Back to Black
By Vittorio Hernandez | February 15, 2013 9:32 AM EST
Mining giant Rio Tinto (ASX: RIO) continues to reap the negative impact of the bad business decisions made by outgoing Chief Executive Tom Albanese, who was forced to resign over losses suffered by the company. On Thursday, Rio reported $3 billion losses for 2012.
It was the first loss for the world's second-largest miner, making the job of Mr Albanense's successor, Sam Walsh, more challenging.
Responding to the red balance sheet, Mr Walsh said in a statement, "Under my leadership, Rio Tinto will have an unrelenting focus on pursuing greater value for shareholders. Demonstrating this commitment, we will deliver our capital reduction and cost savings targets and improve performance across our business."
Besides the losses suffered by Rio on its aluminum and coal assets which were written down and cost Mr Albanese his job, the other reasons for Rio's losses were the lower prices of commodities in the international market.
The impairments' contribution to Rio's net loss was placed at $3 billion, causing the miner's profit to go down from $5.83 billion in 2011.
As a result of the weaker prices for iron ore which plummeted by 23 per cent on the average, Rio is slashing costs and shelving projects in response to calls from investors to improve returns.
In November, Rio announced it would chop costs by over $5 billion by the end of 2014 and reduce exploration spending.
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