Performance
Outlook
The unprecedented decline in global economic conditions towards the end of 2008 is expected to continue in 2009 leading to depressed demand and lower prices for base metals in the short term.
Rio Tinto Copper has responded to these developments by immediately reviewing capital expenditure levels across all managed operations and projects. Two projects (E48 at Northparkes and the MAP project at KUC) have been suspended until prices for copper and molybdenum/rhenium recover. The optionality in both projects has been retained so they can be re-initiated relatively quickly when conditions permit. Studies at the La Granja, Resolution, Sulawesi and Eagle projects have also been slowed. Despite the slowdown in direct investment in the project portfolio, considerable effort is being applied to value engineering, systems and process readiness across all projects. Efforts to reduce operating costs are also under way.
The short term economic situation presents challenges to Rio Tinto Diamonds in terms of weakening demand and prices. However the group has taken decisive action to address this by slowing development and reducing production in the short term at both Argyle and Diavik. The rough diamond market, particularly for higher quality goods remained strong for most of 2008 although demand was weaker during the last quarter of 2008. The weakness of the global economy is expected to lead to lower demand across the entire market.
