Come clean on investments, Rio tells BHP Billiton

RIO Tinto CEO Tom Albanese has criticised predator BHP Billition for failing to acknowledge the need to review investment. A sharp fall in commodity prices has prompted many miners across the world to close mines or curtail production and to defer spending on planned growth projects as profit margins come under pressure. Rio Tinto joined the club earlier this month when it announced it would delay planned divestment of assets, review near-term spending on growth projects and curtail some higher cost aluminium production. "We believe that it is prudent and appropriate for us to review the timing of capital spending, taking into account the near-term impact on demand as well as potential opportunities to drive down project costs," Mr Albanese said in a speech in Montreal. BHP, which has launched a hostile $US73 billion ($115 billion) takeover offer for Rio Tinto, has so far made no announcement of plans to review spending on growth projects and has said its strong cash flow and balance sheet will allow it to reinvest throughout the cycle. In an apparent swipe at BHP, Mr Albanese issued a warning to miners who were not acknowledging the impact of current market conditions. "Those that don't review programs will stand out in not announcing any adjustments, but to think that anyone is immune from this near-term market outlook is simply not credible," he said. "This is not an environment to be wearing rose-coloured glasses. "I believe that Rio Tinto's position of providing clear and open guidance is the best policy in today's environment." Both BHP and Rio Tinto's shares have been savaged on falling commodity prices and fears of slowing global demand for their products, and some analysts argue this has strengthened BHP's hand by increasing the relative value of the $US3.7 billion in synergies it says the deal will deliver. Mr Albanese said recent market movements made no difference to Rio Tinto's rejection of the all-share offer, which he said still significantly undervalued the company. "The vast majority of these synergies come from Rio Tinto assets, and at the current offer of 3.4 shares, Rio Tinto shareholders are not being adequately rewarded," he said. "The fact remains that BHP Billiton need Rio Tinto, while the reverse is not true." Mr Albanese reaffirmed Rio Tinto's belief that China, while not insulated from the impacts of a global slowdown, would remain strong, driven by its domestic economy. "Although we will now see a slower rate of growth, we are confident that the Chinese market will recover," he said. --from Australian business