How Is Rio Tinto’s Capital Spending Expected To Trend In The Coming Years?
Rio Tinto has lowered its capital spending over the past several years as it completed several expansion projects, with the expansion of production capacity of its iron ore mining operations in Australia the most prominent among them. Moreover, with the downturn in commodity prices, particularly iron ore prices, over the course of the last few years, the company has tried to lower capital spending in order to conserve cash flows. Furthermore, the company has also sold off or idled a number of high-cost non-core assets, which has further enabled it to lower its capital spending. After four successive years of reductions in capital spending culminating in 2016, Rio Tinto will start boosting its capital expenditure from 2017 onward, as illustrated by the table shown below.
Source: Rio Tinto Company Presentation, Rio Tinto Website
Though Rio Tinto intends to manage sustaining capital expenditure at levels of around $2 billion, an increase in growth capital expenditure will boost the company’s overall capital spending. The Amrun bauxite mine, the development of the underground section of the Oyu Tolgoi copper mine, and the potential development of the Silvergrass iron ore mine (a decision on the development of which is expected this year) will prop up the company’s growth capex. With iron ore prices rising in Q2 this year after a period of weakness in Q1 and the prices of other commodities such as copper and aluminum also bottoming out, Rio Tinto’s decision to start increasing capital spending looks like it is well timed.
Have more questions about Rio Tinto? See the links below.
- What Is Rio Tinto’s Revenue And EBITDA Breakdown?
- By What Percentage Did Rio Tinto’s Revenue & EBITDA Decline Over The Last 5 Years?
- By What Percentage Can Rio Tinto’s Revenue & EBITDA Change Over The Next 3 Years?
- How Has Rio Tinto’s Revenue Composition Changed Over The Last 5 Years?
- By What Percentage Has Rio Tinto’s Capital Expenditure Declined Over The Past 5 Years?
- To What Extent Would The Commencement Of Production At Simandou Boost Rio Tinto’s Iron Ore Shipments?
- To What Extent Would The Development Of The Underground Section Of The Oyu Tolgoi Mine Boost The Mine’s Overall Output?
- Is Rio Tinto Stock Attractive At $62
- Down 9% This Year, What’s Next For Rio Tinto Stock?
- After Tough 2022 Results, What’s Next For Rio Stock?
- Is Rio Tinto Stock Still Good Value Following The Recent Iron Ore Rally?
- With Iron Ore Prices Under Pressure, What’s Next For Rio Stock?
- With Iron Ore Prices Volatile, Is Rio Tinto Stock Worth A Look?
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