Rio Tinto warned of possible rating cut Rio Tinto has been put on notice for a possible credit rating downgrade because of concerns over rising debts, reinforcing the need for the Anglo Australian mining group to cut costs and make significant asset disposals this year. Standard & Poor's on Tuesday said there was a one-in-three chance Rio could lose its prized single-A credit rating in the next 12-18 months if it did not bolster its balance sheet. The warning came as Ivan Glasenberg, chief executive of Glencore, the commodities trader that is buying Xstrata, said global mining companies had "really screwed up" by ploughing billions of dollars into projects that did not generate returns for shareholders. "We've always been wanting to keep building and keep putting the cash which we generate into new assets," Mr Glasenberg told the BMO Capital Markets metals and mining conference in Florida. That's what we've got to stop doing as a mining industry. We've got to learn about demand and supply. "Now we have a new generation of chief executives; I hope they have learnt their lesson," he added. Sam Walsh, the new chief executive of Rio Tinto, has pledged to maintain the miner's single-A credit rating. Rio's gross debt rose to US$26.7bn from US$21.5bn in the year to December 2012 as capital expenditure ballooned to a record US$17bn and weaker commodity prices hit cash flow. Although spending is expected to fall to US$13bn this year, S&P said Rio would not be able to cut debts because of its commitment to a "progressive" dividend policy. Last year, Rio paid out dividends worth more than US$3bn in 2013, up from US$2.2bn a year earlier. "We see a risk that Rio Tinto's debt may rise further in 2013-14 unless the company makes large disposals or iron ore prices stay well above US$120 a tonne," it said. S&P said Rio's adjusted gross debt of US$33bn, which takes into account asset retirement costs, pension and leases, was above the level of US$30bn "that we see as "commensurate with the current credit rating." Rio has outlined plans to cut US$5bn of costs by 2014 and Mr Walsh has promised "significant cash proceeds" from divestments of non-core assets. Analysts believe Mr Walsh might sell the Iron Ore Company of Canada, Rio's stake in the Rossing uranium mine in Namibia or coal mines in New South Wales. The miner has already flagged its desire to sell Pacific Aluminium and its diamonds business. However, it has not been able to find a buyer for either, and may have to float or spin off Pacific Aluminium. Rio's capex budget could also exceed US$13bn this year if the miner approves a bauxite project in Queensland and a plan to increase the capacity of iron ore mines in Western Australia. Separately, BHP Billiton, the world's biggest resources company, confirmed a significant discovery that it said could "reshape" the future profitability and direction" of its struggling Nickel West business. However, BHP refused to comment on reports that it would look to spin off the business on the back of the find near its Perseverance mine in Leinster, Western Australia. Andrew Mackenzie, the incoming BHP chief executive, wants to simplify the company's portfolio and focus on big iron ore bodies in Australia and Chile as well as oil and gas assets in North America.