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13 MAY 2020 AL CIRCLE

COVID-19 Fight: Rio Tinto eyeing M&A opportunities to withstand market uncertainties

EDITED BY : DEBANJALI SENGUPTA 2MINS READ

Rio Tinto is keeping a close watch on merger and acquisition (M&A) opportunities to diversify its portfolio in a bid to overcome market uncertainties caused by the COVID-19. The news came after Rio Tinto chief executive Jean-Sébastien Jacques said in a statement at a virtual presentation at Bank of America that expanding portfolio is now Rio's strategy to adapt to the post COVID-19 business environment.

COVID-19 Fight: Rio Tinto eyeing M&A opportunities to withstand market uncertainties

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“We are keeping a watching brief on M&A. Right now, the market is finding it difficult to value companies and the Covid-19 recovery pathway is not clear. Rio Tinto will only transact if an opportunity creates value,” said Jean-Sébastien.

According to him, the market recovery pattern from COVID-19 impact appears uncertain, while the market volatilities seem to continue for the next decade.

“In terms of recovery, many predict either a W or a V shaped economic recovery. Although, to be honest, it is just too early to tell,” he commented.

However, he noted that Rio Tinto’s balance sheet over the last four years remained strong with the company’s net debt lowered from $13.8 billion to $3.7 billion. This, according to him, indicates that the company is well-positioned to withstand the upheaval.

Energy Consumption in Aluminium Smelting

In Q1 CY2020, Rio recorded strong production results driven by sustained demand for iron ore and bauxite.

Jacques also hinted Rio might focus more on smaller mine development projects in the future to generate quick cash flows.


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EDITED BY : DEBANJALI SENGUPTA 2MINS READ

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