Never mind the past, we are tap-dancing our way into the future, doing the cost-cut tango. Watch our feet fly and help us take attention away from that US$10.5 million mystery payment in Guinea in West Africa back in 2011 and those uncomfortable questions about who knew what and when. Rather than say more about that, Rio Tinto today is holding a big investor day briefing to reveal the strategy of new CEO J-S Jacques (as Rio describes him). It’s more of the same: cost cut, cost cut, jobs cut, jobs cut — all aimed at generating $5 billion of additional free cash flow over the next five years from a productivity drive unveiled today as part of its long-term strategy:

“In a presentation at an investor seminar in Sydney, Rio Tinto chief executive J-S Jacques underlined the strategy centred around a strong focus on safety, cash generation, a world-class portfolio, commitment to capital discipline and the delivery of superior shareholder returns.”

“Rio Tinto intends to raise productivity across its $50 billion portfolio of assets by focusing on operational excellence to generate superior shareholder returns through the cycle. This is expected to generate a total $5 billion of further free cash flow by the end of 2021 in addition to the cash cost reduction target of $2 billion across 2016 and 2017.”

Not a mention of 500 job cuts in WA in the run-up to Christmas, or the closure of one WA iron ore mine for two weeks over Christmas (despite Rio being able to ship every tonne of ore it can mine and sell it, at prices better than they though a year ago!). Rio has had productivity problems of its own making in WA with the new AutoHaul automated train system not working the way Rio reckoned it would. It’s another “look over here” after former Rio Tinto CEO Sam Walsh managed to dodge the waiting media at Crown Resorts in Perth on Tuesday waiting to ask him about his role in the US$10.5 million payment made to a “consultant” in connection with the company’s then-disputed Guinea iron ore project, Simandou. These tactics may work for a while, but not when the US Justice Department comes to call.

Peter Fray

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