By James Regan
SYDNEY (Reuters) – Global miner Rio Tinto
Rio ended months of speculation by naming Simon Thompson to succeed chairman Jan du Plessis, who will step down after almost nine years at the helm of the Anglo-Australian mining house.
Thompson, a former investment banker and senior executive with Anglo American
The appointment follows a flurry of speculation that Rio might turn to former Xstrata chief Mick Davis, renowned as an astute dealmaker, to take over from du Plessis who is moving to chair British telecom BT Group
“Thompson is well-versed in the Rio Tinto culture, which was very different to that of Xstrata,” said a fund manager on the side of a Rio Tinto investment seminar in Sydney, who asked not to be named.
“I’d expect this to be received positively by the market and investors,” he added.
Rio Tinto, which is expected to boost revenue by about 15 percent in 2017 to $39 billion, according to Thomson Reuters forecast data, has focused on driving down costs at its iron ore, copper and other businesses in a bid to boost returns to shareholders amid volatile commodity markets.
“Rio Tinto is in a strong position. Our value over volume strategy is working,” Chief Executive Jean-Sebastien Jacques told investors at a briefing on Monday.
Jacques said Rio would hold the line with its current strategy with the appointment of Thompson.
“This is by no means a structural shift for us,” Jacques told Reuters. “With Simon, we are continuing on the same successful course we have already laid out to our shareholders for maximizing our operations and growth.”
FOCUS ON RETURNS
Rio Tinto on Monday also reduced its forecast for capital expenditure, putting 2017 capex at less than $4.5 billion from an earlier forecast of $5 billion, as it focuses on boosting shareholder returns.
The company said that it will deliver additional free cash flow of $1.5 billion a year from 2021, following on from its drive to boost free cash flow by $5 billion over 2017 to 2021.
However, it pointed to a possible slowing in China over the next six months, with a weakening in construction, infrastructure and automotive demand growth. Rio said it remains optimistic about China in the medium to long term.
The miner expected to ship 330 million to 340 million tonnes of iron ore from its Pillar operations in 2018, slightly ahead of its forecast of 330 million tonnes for this year.
Shares of Rio Tinto rose 1.2 percent by early afternoon in a flat broader market <.AXJO>.
(Reporting by James Regan and Shashwat Pradhan in Bengaluru; Editing by Richard Pullin)