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Remotely controlled tipper trucks operate at a Rio Tinto iron ore mine in Western Australia in this undated handout picture made available March 26, 2012.
Remotely controlled tipper trucks operate at a Rio Tinto iron ore mine in Western Australia in this undated handout picture made available March 26, 2012.
(Handout/Reuters)

FINANCIAL TIMES

Miners hacking away at costs and spending

Lex is a premium daily commentary service from the Financial Times. It helps readers make better investment decisions by highlighting key emerging risks and opportunities.

After growth comes a focus on costs. It does not take a management degree to work that one out. Cost control and capital expenditure cuts are the new mantras for big mining companies. The word “productivity” has come up many times in speeches by Andrew Mackenzie since he became the new boss of BHP Billiton Ltd. in May. Sam Walsh of Rio Tinto Group has pledged to cut $5-billion (U.S.) in costs this year and next. How easy will it be to fix the sloppy cost control of the boom years? And can cost-cutting go far enough to make up for the expected slowdown in commodity demand?