No relief from Rio Tinto
Rio Tinto boss Sam Walsh has signalled the company will continue to pile the pressure onto smaller iron ore producers, telling investors in London overnight Rio will push ahead with plans to expand its Pilbara mines.
As Australia's mid-tier producers face oblivion with iron ore prices last week falling below $US50 a tonne, Mr Walsh told shareholders at the annual meeting Rio would do more to push down costs to maintain the gap between it and its smaller peers.
"With iron ore now trading around $US50/t . . . we have more to do to ensure that we maintain the margin between ourselves and the high-cost producers," Mr Walsh said.
"The global iron ore market is in a period of transition, with high-cost supply being supplanted by low-cost production."
Mr Walsh told the meeting Rio's Pilbara cost of production had fallen to about $US17/t a tonne this year, down from $US19.50/t in 2014, but said there was still more costs to cut in WA.
"We have worked hard to stay in front of the challenges associated with the market, particularly at a time of lowering iron ore prices. It is imperative that we continue to do this," he said.
The Rio boss signalled there would be no let-up in the company's push to expand its Pilbara production to 360mtpa, despite calls by competitors such as Fortescue Metals Group for a halt to the iron ore production wars, and criticism of its expansion by Premier Colin Barnett.
Mr Walsh said Rio would push ahead with the expansion of Rio's Pilbara mines to match its infrastructure capacity. The company hit a 290mtpa run rate in May last year, and has said it will export 330mt this year, and at a rate of 350mtpa by 2017.
"Our Pilbara expansion represents a clear and consistent strategic response to the unprecedented long-term growth in China," Mr Walsh said.
With Bloomberg
