BEIJING: Rio Tinto Group, the world’s second-largest mining company, reported third-quarter iron ore production rose 12 percent after completing key elements of its infrastructure expansion in Western Australia and boosting mine capacity.
Total output expanded to 86.1 million metric tons in the three months to Sept. 30, London-based Rio said Friday in a statement. That compared with 76.8 million tons a year earlier and the 87 million ton median estimate of five analysts surveyed by Bloomberg.
Benchmark iron ore prices have fallen more than 70 percent from a 2011 peak amid slowing economic growth in China and as the largest suppliers, including Rio and BHP Billiton Ltd., raise output to boost savings and squeeze out higher-cost rivals. Prices will extend declines in 2016 as additions to supply overwhelm output cuts by smaller producers, according to BMI Research.
Rio’s “mantra has not changed, and this quarterly production report shows that they are not blinking,” Evan Lucas, a markets strategist at IG Ltd. in Melbourne said by phone. “They are still squeezing the market, and still giving the lower end of town real pressure.”
An expansion of Rio’s infrastructure in the Pilbara region, which includes 1,700 kilometers (1,050 miles) of railroads and four port terminals, to provide capacity for shipments of 360 million tons a year has been completed, Rio said in the statement. Upgrades added about 40 million tons a year of mine capacity at its West Angelas, Nammuldi and Brockman sites, the producer said.
Rio fell 1 percent to A$53.69 in Sydney trading, extending its decline this year to 7 percent. That compares with a 21 percent drop in the Bloomberg World Mining Index.
Fortescue Metals Group Ltd., the fourth-biggest exporter, has halted output expansions citing weaker prices and a saturated market. The supplier’s founder and chairman Andrew Forrest in August accused large competitors of “market vandalism,” by raising production amid weak demand. Rio rejected his analysis as overblown.
Iron ore delivered to China in the three months to Sept. 30 averaged about $55 a ton, compared with more than $90 a ton in the same period a year earlier, according to Metal Bulletin Ltd. data. Faltering growth in China, the biggest consumer of metals and energy, has slashed commodity prices and eroded earnings for producers including Rio, which reported a 43 percent drop in first-half profit.
