Companies

Rio Tinto sees no material impact from Japan quake

(China Daily)
Updated: 2011-05-06 12:54

PERTH, Australia - Rio Tinto Group, the world's third-largest miner, expects global markets to remain volatile in the short term, but said strong demand from China had offset any temporary loss of sales to Japan following the earthquake and tsunami disaster.

The company said it has seen little real impact from the crisis in Japan, its second-largest customer.

"We've seen some impact to individual shipments of some of our products, but they have almost entirely been offset by continued strength in the Chinese markets," Chief Executive Tom Albanese told reporters after the group's annual meeting on Thursday.

Related readings:  Rio Tinto chairman warns global economy remains weak  Rio Tinto close to control of Riversdale Mining  Rio 2016 to seek less sponsorship profit  Baosteel inks coal import deal with Rio Tinto

The supply of equipment, such as trucks or parts, made by Japanese companies had been disrupted but the company was able to get around that.

"While there have been areas where we've seen some short-term impact, they have not been material and they have not had a material impact on the business," Albanese said.

Rio still sees financial markets as fragile due to economic and financial imbalances, Chairman Jan du Plessis said, reiterating comments from the group's annual meeting last month in London.

"However, our pursuit of operational excellence and our strong balance sheet put us in a positive position to weather this short-term volatility."

After struggling through the global financial crisis and paying down $40 billion in debt that it took on for its ill-timed acquisition of Alcan Inc in 2007, Rio recently secured an upgrade in its credit rating from Standard & Poor's to single A, following an upgrade from Moody's.

Following a record profit for 2010, the company launched a $5 billion share buyback, of which it has bought back about $1.3 billion worth of its UK listed shares so far.

Du Plessis said the company would consider further buybacks once this one is completed, but said a buyback of its Australian shares was unlikely in the near term as the Australian shares were more expensive than its UK shares.

With low debt and soaring cash flows, Rio is back on the hunt for acquisitions, but has made clear it is only interested in small-to-mid-size deals worth less than $10 billion, in order not to stretch its balance sheet too much. "That's a low-risk, sensible way to add value," du Plessis said.

Albanese dismissed speculation which roiled the market on Tuesday that Rio was lining up a bid for top North American aluminum producer Alcoa.

Reuters