Rio Tinto to buy back $1.5bn of near-term debt

Rio Tinto has begun to use its healthy levels of cash to pay off around $1.5bn of its near-term debt.

The FTSE 100 miner said it had begun a cash tender offers to purchase any or all of its $1.75bn dollar-denominated 2017 bonds up to a value of $1.5bn, and if any of that amount remains after 27 April, a Dutch auction of its 2018 notes lasting until 18 May.

Following consummation of the offers, the securities that are purchased will be retired and cancelled and no longer remain outstanding.

Rio finished 2015 with cash and equivalents of $9.4bn and net debt of $13.8bn, down from the $14.5bn pro-forma position at the end of 2014.

At Tuesday's first-quarter results Rio cut its 2017 production guidance from its Pilbara iron ore mines due to a delay in the rollout of its AutoHaul driverless trains.

The target was trimmed to between 330m and 340m tonnes next year, from the previous guidance of 350m tonnes.

Chief executive Sam Walsh, who is being replaced by the group's copper and coal chief executive Jean-Sébastien Jacques from 1 July, has set a target of cutting operating costs by a further $1bn in 2016 and another $1bn in 2017, as well as reducing capital expenditure to $4bn in 2016 and $5bn in 2017.