Rio ready for growth but still cautious
RIO TINTO reported a two per cent fall in iron ore production since last year and raised concerns of a possible double-dip recession and slower Chinese growth yesterday.
The world’s second-biggest iron ore miner said it was running its mines close to capacity and forecast total annual output of 234m tonnes, slightly up on earlier forecasts.
“Markets for most of our products are strong and the overall long-term demand outlook is positive,” chief executive Tom Albanese said in the company’s second quarter review.
“But in recent weeks, fears about a possible double-dip recession in OECD countries and a slight slowdown in Chinese growth have led to some weakening in sentiment,” Albanese added.
The firm said its copper production fell 19 per cent on last year due to lower ore grades in several mines, and that aluminium production may suffer after power problems in Quebec. Gold production was also down 34 per cent.
The firm said the impact of the slowdown on underlying earnings would be around $100m (£65.6m).
Expansion in Australia came a step closer yesterday as the firm has approved $200m of funding to enlarge its mines in Pilbara, following the end of a long-running spat with the government over the planned tax on mining operations.
“Growth is firmly back on our agenda. We have a large range of options for expansion and investment competing for capital,” said Albanese.
The firm is keen to move on from its ill-timed investment in Alcan, parts of which were sold off for $3.6bn during the first half of 2010. Shares closed 0.5p down yesterday.