Rio Tinto names Thompson as next chairman; cuts capex outlook

Rio ended months of speculation by naming Simon Thompson to succeed chairman Jan du Plessis, who will step down after nearly nine years at the helm of the Anglo-Australian mining house. Deutsche Bank upped their price objective on Rio Tinto from GBX 4,300 ($57.59) to GBX 4,500 ($60.27) and gave the company a buy rating in a report on Friday, October 13th.

These projects will build on recent investments in high-quality growth projects - Silvergrass (iron ore in Western Australia), Amrun (bauxite in Queensland) and Oyu Tolgoi (copper and gold in Mongolia) - that will deliver internal rates of return of more than 20%. Backed by the exit from unwanted assets, it has slashed debt and has been buying back shares to return cash to shareholders. The Company operates an iron ore business, supplying the global seaborne iron ore trade. The miner said it was cooperating with authorities in the Guinea investigation and has handed over emails and information to investigators. Advisors Asset Management Inc. lifted its stake in shares of Rio Tinto by 5.6% in the third quarter.

Mr. du Plessis said in March he was stepping down to join British telecommunications firm BT Group PLC, where he became chairman last month. "Our value over volme strategy is working", Chief Executive Jean-Sebastien Jacques told investors at a briefing on Monday.

Macquarie reissued their outperform rating on shares of Rio Tinto (LON:RIO) in a research report released on Friday morning. Thompson, a Briton, has held several high-ranking industry positions during his career, including the above-mentioned Anglo American executive director position, non-executive director and chairman of Tullow Oil, and non-executive director of Newmont (2008-2014), AMEC Foster Wheeler (2009-2014) and Sandvik (2008-2015). Rio Tinto earned a news impact score of 0.13 on Accern's scale.

The company has a number of expansion opportunities being considered to expand the company, including an iron-ore project in Australia's remote Pilbara, aluminum operations in Canada, copper in the US and its Jadar lithium project in Serbia, he said.

While Rio Tinto remains optimistic about China in the medium to long term, there could be a slowdown over the next six months, with a weakening in construction, infrastructure and automotive demand growth during that period.

The company also said that it will deliver additional free cash flow of $1.5 billion a year from 2021, following on from its drive to boost free cash flow by $5 billion over 2017 to 2021. Net profit in the first half of this year jumped to $3.31 billion from $1.71 billion the year before.

Rio also lowers its 2017 capex forecast to less than $4.5B vs. earlier guidance of $5B before rising to $5.5B in 2018 and $6B in each of the following two years.

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