Rio Tinto sticks to bold iron ore expansion plans
SYDNEY (Reuters) - Rio Tinto (RIO.AX) (RIO.L) is maintaining its plan to substantially increase iron ore production over the coming years, saying its global output capacity could almost double to 450 million metric tons (496.04 million tons) by 2016 from current levels.
Rio, along with other big diversified miners including BHP Billiton (BHP.AX) (BLT.L), Vale (VALE5.SA) and AngloAmerican (AAL.L), are beefing up iron ore divisions in anticipation of long-term demand for the steel-making ingredient, even as slowing economic growth in top consumer China casts doubt on near-term consumption.
Rio, the world's No.2 producer of iron ore behind Vale, is already committed to lifting yearly output capacity at its main Pilbara mines by 23 percent to 283 million metric tons. It has a proposal before its board to increase that to 353 million metric tons by the first half of 2015.
"At current estimates, we have options to expand to a global annual capacity approaching 450 million metric tons by 2016, when Canada and our new project in Guinea are added in," iron ore chief Sam Walsh told a business luncheon in Sydney on Thursday.
Signs of slowing growth in China have rattled commodity markets in recent weeks, prompting sharp falls in some resource prices on fears demand will slump.
Chinese buyers are deferring or have defaulted on coal and iron ore deliveries following a drop in prices, traders said this week.
BHP chairman Jac Nasser said last week the company would not meet its five-year, $80 billion capital expenditure plan, but did not mention which areas may be pushed back. Analysts say big iron ore expansion and infrastructure projects are less likely to be affected.
BHP has plans to expand its Australian iron ore mines, where margins are among the industry's strongest, and is awaiting approval on further expansion plans.