Rio cuts exploration costs, buys cheap assets

By Eric Onstad

LONDON (Reuters) - Miner Rio Tinto (RIO.AX) (RIO.L) is halving exploration spending this year but is taking advantage of the downturn to buy cheap assets in places like the Democratic Republic of Congo, Rio's exploration chief said on Wednesday.

The group, which is grappling with heavy debt, has put expensive drilling operations on hold until conditions in depressed metals markets improve, Eric Finlayson told Reuters in an interview on the sidelines of the Mining Investment Congress in London.

Spending this year on both greenfield and brownfield projects is budgeted at $115 million (71 million pounds), down from $235 million in 2008, Finlayson said.

He said the firm was also hoping to sell some projects, with the goal to completely offset the unit's spending with income from divestments.

"We have had to make some hard choices ... What we've tried to do is conserve as many of the options we have," Finlayson said.

While advanced drilling programmes were being trimmed, Rio was expanding in early stage projects.

The group has been taking advantage of the downturn to buy assets when many firms are under pressure or withdrawing.

"There are some excellent opportunities, particularly from distressed juniors," Finlayson said. "We have been picking up some very low cost, very high quality opportunities."