LONDON (Reuters) - Global mining company Rio Tinto (RIO.L) told investors it would prioritize cutting its debt burden in 2014 before returning cash to shareholders, pressing ahead with cost reductions that have already exceeded a $2 billion 2013 target.
Rio, along with other major mining companies facing cooling demand for its minerals, has announced aggressive cutbacks, from administrative costs to spending on exploration, hoping to boost flagging shareholder returns and protect its credit rating.
It said earlier this month that it would halve capital spending to $8 billion by 2015.
Rio told analysts and investors on Wednesday its focus next year would be to continue lowering a debt burden that is likely to end 2013 little changed from a year ago - roughly $19 billion - after hitting a peak of $22 billion in June.
"2014 is going to be very much focused on paying down debt with any surplus cash we generate there..., that is after whatever the board decide on progressive dividend in February," Chief Financial Officer Chris Lynch told analysts and investors after a presentation in London.
"(The debt) will be paid down progressively. Once we get it down a bit further we will be in a position to be talking more about further cash returns to shareholders."
Rio has long focused on retaining a single-A credit rating, and Lynch said the company believed its cost-cutting actions were "supportive" of retaining the rating.
Part of that plan has included a program of asset sales, but Rio again warned on Wednesday that it would not be a seller at all costs. So far, it has announced or completed non-core asset sales worth $3.3 billion this year.
Asked about progress on the sale of its majority stake in Canada's largest iron ore producer, Iron Ore Company of Canada (IOC), Chief Executive Sam Walsh said there would be no "reshaping (of the portfolio) for reshaping's sake", hinting that iron ore prices had also been supportive of the company's decision to take its time over the sale.
The iron ore price, after a sharp drop in September last year, has been steady in recent months and is currently around $139 per ton .IO62-CNI-SI.
"If someone values an asset more than we do, because of synergies or some other driver of their calculations, we are interested in exploring that. If people are not going to deliver value, we are not going to proceed with divestments," Walsh said.
Rio was first reported to be considering a sale of the Canadian iron ore business earlier this year, but the process has been slow and, sources familiar with the situation have said, disappointing.
Reporting by Clara Ferreira-Marques; editing by Tom Bergin and Tom Pfeiffer