Rio Tinto Freezes All Salaries Including CEO's for 2016
January 14 2016 - 11:28AM
Dow Jones News
By Alex MacDonald
LONDON--Mining giant Rio Tinto PLC (RIO) has frozen the salaries
of all its employees, including the chief executive, and is urging
staff to cut back on all non-essential activities to preserve cash
amid a protracted slump in commodity prices.
The London shares of the Anglo-Australian miner, the world's
second-largest by market value, have fallen nearly 40% over the
past year after the price of iron ore and copper dropped to
multi-year lows in recent weeks.
The spot price for iron ore, a key steelmaking ingredient and
Rio's main earnings driver, has fallen 70% to just under $40 a
metric ton from $130 a ton a year earlier while the copper price
has fallen by more than 20% during the same period to a new
six-and-a-half-year low of $4,330 a ton on Thursday.
"As part of the focus on cash, from the CEO down, we are
implementing a salary freeze for 2016," said David Outhwaite, a Rio
Tinto spokesman in an emailed statement. "Of all the actions we are
taking, this decision was one of the most difficult, as it doesn't
reflect the hard work or effort put in by our employees. But it is
necessary given the market context."
When asked if the company would also cut its dividend to
preserve cash, Mr. Outhwaite declined to comment. Analysts expect
Rio may face pressure to pare back its dividend after other top
mining firms such as Brazil's Vale SA, Switzerland's Glencore PLC,
and the U.K.'s Anglo American PLC cut their dividends last year.
Fellow Anglo Australian peer BHP Billiton Ltd, the world's largest
by market value, has already said it will review its dividend
policy in February when its board meets.
Citigroup cut its target price on Rio Tinto's stock by 16% to
2,100 pence a share Thursday on expectations the company will
generate lower earnings after it downgraded its iron ore price
forecast to around $35 a ton over the next few years from $40 a ton
previously.
Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
January 14, 2016 11:13 ET (16:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Rio Tinto (NYSE:RIO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Rio Tinto (NYSE:RIO)
Historical Stock Chart
From Apr 2023 to Apr 2024