The Wall Street Journal : Mineral prices have rebounded

Industry News 2010-06-22 11:29:15
Source  : The Wall Street Journal

Author   : John Kell, Dow Jones Newswires

Date      : June 16 2010
Standard & Poor's Ratings Services lifted its outlook on mining giant Rio Tinto PLC (RTP, RIO.AU) to positive, saying metals and minerals prices have rebounded after a severe downturn in 2008, and noting the company had reduced its debt.
The ratings agency said the improved outlook also reflects its opinion the company's credit metrics could improve over the next year to 18 months to be commensurate with a higher rating.
S&P did warn of downside risks, including the level of prices, the size of the company's capital expenditure spending, and dividends, which include a cash 
payment of at least $1.75 billion this year, in coming years. S&P also factored in management reducing such spending if necessary should prices fall, to protect credit ratios.
Rio Tinto's rating stands at BBB+, which is three notches into investment-grade territory.
In April, the company posted disappointing first-quarter production results but predicted a 7.8% increase in iron-ore output for the year. The Anglo-Australian company's production shortfalls in iron ore, copper, aluminum and coal are expected to be made up by rising commodity prices.
And while the company sees positive medium- and long-term prospects for the economy, it has also renewed its attack on the Australian government's planned mining tax, which it says is divorced from commercial reality.

Rio Tinto's American depositary shares were recently down 0.5%, or 23 cents, to $49.72. The stock is down 7.7% this year. 


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