Rio Tinto ramps up iron ore production despite growing criticism

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Argyle3 rdax
Argyle3 rdax

Rio Tinto, the world’s second-biggest exporter of iron ore, has recorded a 5% increase in iron ore output in the third quarter of the year as it capitalises on its first-full quarter of production from its Pilbara expansion.

Image credit: www.riotinto.com. Photographer: Christian Sprogoe PhotographyDate: 27 July 2009
Image credit: www.riotinto.com. Photographer: Christian Sprogoe PhotographyDate: 27 July 2009

According to the Business Spectator,  the miner’s global iron ore production in the three months to 30 September came to 76.8 million tonnes, a 12% increase on the previous corresponding period, with global iron ore shipments in the quarter standing at 78 million tonnes, a 15% increase on the third quarter of the previous year.

The announcement came at a time when Rio and its rival miner BHP Billiton found themselves under a growing criticism for their strategy to pump new supplies into an oversupplied market, which analysts interpreted as an attempt to crowd out smaller, higher-cost producers by  pushing the price of iron ore down by about 40% this year.

West Australian Premier Colin Barnett lashed out at Rio and BHP and accused them of “acting seemingly in a concerted way” in their push to increase iron ore tonnes.

“I find it a strange policy, indeed a flawed policy, that the major iron ore producers would be putting more and more product into a declining, soft market,” Mr Barnett said, adding that it was damaging to Western Australia.

Adertisement

“This strategy of the two major producers to flood the market and force the price down, I mean, remember who your landlord is,” he said.

Rio Tinto’s boss Sam Walsh defended the company strategy, saying its plans and its expansions were approved by government.

“It’s a cyclical industry. We shouldn’t panic when there is a blip in iron ore pricing; the fundamentals are very strong for the industry,” Mr Walsh said.

“Beyond China there is India, Southeast Asia, the Middle East, South America and Africa: as each of these countries go through the same industrialisation our commodities will be needed. Colin shouldn’t worry, there will be demand for our product.”