RIO TINTO yesterday reported flat iron ore production in the second quarter compared with the same period last year.
Sales fell slightly short of output, putting pressure on its shares and heightening concerns about cooling Chinese demand.
Rio Tinto’s iron ore production was steady at 48.6m tonnes in the June quarter, compared with 48.9m tonnes a year earlier and 45.6m tonnes in the first quarter.
The global miner generates about 80 per cent of its earnings from iron ore and recently committed to spending $3.7bn towards expanding its Australian iron ore capacity by another 25 per cent, calling iron ore the best-returning commodities business in a tough global environment.
Chief executive Tom Albanese said that despite global volatility, the company’s expansion projects still stack up. Global economic conditions and sentiment dropped markedly in the second quarter,
“We are keeping a close eye on the pace of the US recovery, the continuing Eurozone crisis and the impact of efforts to stimulate the Chinese economy on the markets that we serve.”
Shipments from Rio Tinto’s Western Australian iron ore operations were 57.4m tonnes, compared with production of 58.4m tonnes.
Rio, the world’s second largest iron ore producer, said it remained on track to produce 250m tonnes in 2012, which some analysts said may be difficult to achieve if Chinese steel production growth remains weak, “Iron ore didn’t recover as much [from the first quarter] as people had hoped,” said JP Morgan analyst Lyndon Fagan.
City A.M. Reporter