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Rio posts $2.9bn loss

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February 14 2013, 5:43PM

Rio's new chief executive Sam Walsh said the company's long-held strategy of investing in and operating large, long-life, low-cost mines and businesses would maximise returns for shareholders in a volatile economic environment.

"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 in a statement.

"We are also targeting significant cash proceeds from divestments of non-core businesses in 2013."

Mr Walsh said Rio last year generated strong margins in copper, iron ore and minerals.

"But our aluminium and energy businesses faced a deterioration in market conditions coupled with rising costs which we are addressing through our cost saving and value enhancement programs," he said.

"Looking ahead, we see the positive momentum in the fourth quarter of last year being sustained into 2013 with Chinese GDP growth returning to above eight per cent in 2013.

"We expect market uncertainty and price volatility to persist as long as the structural issues in Europe and the United States remain unresolved."

Mr Walsh said Rio would target cash cost savings of more than $5 billion to be achieved over the next two years.