Cuts keep Rio in the race

COST cutting is keeping Austra-lian and UK-listed mining giant Rio Tinto robust despite a strong downturn in commodity prices.

But Rio Tinto chairman Robert Wilson admitted that if 1999 first quarter prices prevailed, the current efficiency drive would not be enough.

Mr Wilson said copper and aluminium prices were 20 per cent below the long-term trend.

He and Rio Tinto chief executive Leon Davis were in Perth for the company’s Australian annual general meeting.

It is the first time Perth has played host to a Rio Tinto AGM.

Despite the gloomy outlook, Mr Davis said the company would continue to try and reduce costs.

“The only limit to cost cutting is the imagination,” he said.

“There is still fat to be cut from the organisation.”

Mr Davis said reorganising Rio Tinto into six product divisions “was the best thing the company had ever done”.

“We get transparency and best practice – and great benefits for transferring knowledge,” he said.

“The CEOs of those divisions are much better focused.”

Mr Davis said the old geographical split of the multinational’s operations had spread the talents of the company’s CEOs too thinly.

They had to concern themselves with several different product areas whereas now they focus on one.