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Reuters

Rio Tinto signalled on Thursday it will continue to boost iron ore production but has yet to give construction approval for a new mine in Australia amid board promises to rein in spending.
The world’s second-biggest iron ore miner said demand for the mineral would continue to grow despite current soft conditions and that half would be delivered via the seaborne market for at least the next 15 years, justifying an increase in tonnage.
Spot iron ore prices have fallen more than 20 per cent this year as an economic slowdown in China curtailed the country’s use of steel.
The new mine, called Silvergrass, is deemed essential if Rio Tinto is to reach a longer-term 360-million-tonne global target, up from a 340-million-tonne target this year and 350 million tonnes in 2017.
Silvergrass has been deferred three times in the past two years, and has been estimated to cost US$1 billion to develop. It is now subject to approval next year, the company said.
In documents released before an analysts’ briefing by its iron ore chief executive Andrew Harding, Rio Tinto also stuck to a forecast for global iron ore demand to grow by 2 per cent a year to 3 billion tonnes in 2030.
Iron ore has moved from boom to bust in the past 18 months as massive new supplies flood markets.
Rio Tinto sees a total of 120 million tonnes of high-cost iron ore from China and seaborne supply exiting the market this year, with a further 45 million tonnes a year of seaborne supply “at risk”.
The company reiterated its forecast that China will hit 1 billion tonnes of crude steel production by 2030. Rival BHP Billiton recently cut its forecast for Chinese steel production, saying it now expected output to peak at between 935 million and 985 million tonnes in the mid-2020s.
Some analysts see Chinese steel production running at roughly 820 million tonnes a year and heading lower at an annual rate of 1 to 2 per cent over the same timeframe.
Steel production in China - the key barometer for the health of the iron ore sector - fell 1.3 per cent year on year in the first half of this year, triggered largely by a slowing construction sector.
Rio Tinto has vowed to reduce capital investment by at least US$2.5 billion over two years. This year it aims to cut costs by US$1 billion in order to maintain dividends and fund a share buyback.


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Commodities

Rio Tinto still aims to boost iron ore production despite China slowdown

Rio Tinto forecasts that global iron ore demand will hit 3 billion tonnes a year by 2030. Photo: Reuters

Australia's Rio Tinto shows Q2 iron ore boost, but cuts shipping guidance

Iron ore being transferred at Rio Tinto's mine in Western Australia. Photo: Reuters

Rio Tinto, Mongolia clinch deal on building huge copper mine

Mongolian workers at the ore processing facility in the Oyu Tolgoi copper mining project in the Gobi desert in Mongolia. Photo: AFP

Rio Tinto turns up the heat on rivals with even cheaper iron ore

Rio Tinto iron ore mine in Pilbara, Australia. The miner has been criticised for 'squeezing the lemon' after cost cuts that have put some rivals out of business. Photo: Bloomberg

Business