Rio sticks by growth plan
Rio Tinto chairman Jan du Plessis has denied the Pilbara’s biggest iron ore player is flooding the market to drive out competitors, and has rejected accusations from smaller players and community leaders it is aloof to the widespread pain the metal’s downturn is causing in WA.
Speaking toWestBusiness last night ahead of today’s Rio annual meeting in Perth, Mr du Plessis said Rio took no joy from the carnage caused by the iron ore price collapse, which has cost thousands of jobs in WA.
But Mr du Plessis did not back away from Rio’s Pilbara growth push, to mirror moves by BHP Billiton and Brazil’s Vale over the past fortnight.
Instead, Mr du Plessis revealed the investment in infrastructure, to support Pilbara output of 360 million tonnes a year, was days from completion, which would enable Rio to bring on extra supply at “very low levels of capital”. Rio expects to produce 305mt this year.
“We have no desire to flood the market with iron ore, we have absolutely no desire to take competitors out of the business, we derive no pleasure from the inevitable pain that we are all suffering at the moment and I really want to emphasis that,” he said.
“We know things in WA are tough, we are in this ourselves. (Rio) have made really, really painful adjustments, not just in Perth or WA but globally, by reducing head counts, toughening up the way we work.
“(But) we still have very attractive margins and the return on investment is very attractive. That is all we can do. We can’t solve all the problems in the world. Would I prefer iron ore to be between $US100/t and $US150/t (it is $US58.70/t), of course, but it is completely and utterly unrealistic.
“It is tough out there, we are just part of the players who are going through this massive (cost) adjustment process.”
Mr du Plessis said Rio shareholders support Rio’s strategy.
But Mr du Plessis’ comments, his first on the iron ore woes debate dominating headlines in Australia, are likely to further infuriate Premier Colin Barnett and Fortescue Metals Group chairman Andrew Forrest, who have variously accused Rio and BHP of flooding the market to destroy competitors.
Mr Forrest says Rio is not acting in the national interest by persisting with increased ore volumes despite the metal’s collapsed price.
Mr du Plessis said Rio’s market share of seaborne iron ore, at 20 per cent, was the same as a decade ago, which he said underscored his argument Rio was not flooding the market.
