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.
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.
“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.”
