At the same time capital expenditure ballooned by 50% to $1.5 billion for the coal division as it remains committed to its investment in the Kestrel longwall mine extension and expansion in Queensland.
A longwall changeover, adverse weather conditions and commissioning delays of a new coal handling and process plant in the December quarter impacted coal sales from Kestrel but the extension remains on track to come onstream in the second quarter of 2013.
When the extension is complete, capacity will increase to up to 7 million tonnes per annum with an average of 5.7Mtpa of saleable coal expected over the extended 20-year life of the mine.
Purchase of property, plant and equipment and intangible assets for the entire Rio Tinto group rose to $17.4 billion, an increase of $5.1 billion from 2011.
Newly appointed chief executive officer Sam Walsh indicated that the company would be taking a hard line on capex in the future.
“We are reinforcing our capital allocation processes and will only invest in assets that, after prudent assessment, offer attractive returns that are well above our cost of capital and which offer a superior return when compared to returning cash to shareholders,” he said.
“We are also targeting significant cash proceeds from divestments of non-core businesses in 2013.”
As previously flagged by outgoing CEO Tom Albanese, an impairment charge of $2.8 billion post-tax was also recognised relating to Rio Tinto Coal Mozambique.
“The development of infrastructure in Mozambique to support the undeveloped coal asset is more challenging than initially anticipated which, combined with a downward revision to estimates of recoverable coking coal volumes, have led to a reassessment of the overall scale and ramp-up schedule of RTCM and consequently to the assessment of its fair value less costs,” the company said.
