PERTH (miningweekly.com) – Mining major Rio Tinto has unveiled plans to generate about $5-billion of additional free cash flow over the next five years from a productivity drive.

CEO Jean-Sébastian Jacques told an investor seminar in Sydney that the company intended to raise productivity across its portfolio of assets by focusing on operational excellence. By 2021, the company plans to generate $5-billion in free cash flow, in addition to the $2-billion cash cost reduction target set for 2016 and 2017.

“Our strategy plays to our strengths, world-class assets, a strong balance sheet along with commercial and operating excellence. A relentless focus on generating cash, together with capital discipline, prioritising value over volume, means that investors can expect us to deliver superior shareholder returns whilst continuing to invest through the cycle. We have the right team and performance culture in place to deliver this strategy,” Jacques said.

“We have placed our assets at the heart of the business to drive improved performance and ensure our resilience through the cycle. We are well on track to meet our target of $2-billion of cash cost savings by the end of next year. We are also taking advantage of any opportunity to generate value from mine through to market. Lifting the productivity on our $50-billion asset base creates a low-risk and highly attractive return. It will deliver an additional $5-billion of free cash flow over the next five years.”

In addition to improving the performance of its asset base, Rio is also committed to investing in growing the business, Jacques said.

In the near term, this will be delivered by three high-quality growth projects – the Silvergrass iron-ore project, in Western Australia, the Amrun bauxite mine, in Queensland, and the Oyu Tolgoi copper and gold mine, in Mongolia.

“This investment underpins an annual average copper equivalent growth in excess of 2% between 2015 and 2025. Longer term, exploration remains a priority for Rio Tinto, with a commitment to maintain the group’s successful exploration programme,” he said.

Meanwhile, the company also continued to refine its portfolio to ensure the most effective use of capital, with Jacques pointing out on Thursday that over the past three years, Rio had divested more than $5-billion of assets, including $1.3-billion worth of assets in 2016 alone.

Jacques noted that while some of the company’s retained assets might be smaller, they were considered valuable and highly cash generative.

“Given the uncertain growth of the future, we are happy to keep this broader perspective, and to look at new commodities.”

However, Jacques said that Rio would not hesitate to exit any asset or project that did not fit the company’s bill.