Rio Tinto cautious on short-term outlook for aluminium market

RIO Tinto says it remains cautious about the short-term outlook for the aluminium market and that cash preservation remains a key priority for its aluminium business. In a presentation to analysts, executives from the miner's aluminium division, Rio Tinto Alcan, said the long-term story for aluminium remained attractive with annual demand growth expected to be 4 per cent-6 per cent through economic cycles. However, Rio Tinto Alcan chief executive Jacynthe Cote said the company remained cautious about the short-term and a key focus for now is cash preservation. The unit was, "mindful of retaining the capability to efficiently run and grow the business when markets recover," she said. Recovery signs for end users of aluminium were mixed but prices had been rising on increased optimism about global growth, a depreciating US dollar and China becoming a net importer of unwrought aluminium. "However, we remain cautious because some headwinds are also at work," Rio Tinto Alcan's vice-president industry analysis, Carmine Nappi, said. Ms Cote said the business had been earnings before interest, tax, depreciation and amortisation positive in the first half and its break even price for aluminium was $US1350 a tonne at the end of the second quarter. Production costs were coming down and raw material cost reductions would continue to flow in the second half, she said. Rio Tinto bought Alcan for $US38.1 billion ($44bn) in 2007 and the company said it was on track to deliver $US1.1bn in synergies from the business in 2010.