SYDNEY: Rio Tinto PLC RIO shipped record volumes of iron ore again in 2015 as the world’s No. 2 exporter of the steelmaking commodity put the finishing touches on a massive expansion of its Australian mining operations.
On Tuesday, Rio Tinto reported annual global iron-ore shipments totaling 336.6 million metric tons, up 11% on-year and just shy of its earlier projection of 340 million tons.
Volumes were more than a third higher than what the company, which runs iron-ore operations in Canada as well as Australia, was shipping just three years earlier. Rio Tinto has been expanding its presence in the Pilbara iron-ore mining hub of northwest Australia in a bet that China will need more of the commodity to make steel for its skyscrapers and for industries such as auto manufacturing, even as its economy slows.
China buys three in every five tons of iron ore traded by sea, with Australia its biggest supplier. However, Rio’s record shipments have added to a rising global oversupply that’s dragged prices to roughly US$40 a ton from more than US$190 a ton as recently as 2011.
Executives say the scale of Rio Tinto’s iron-ore business–which it relies on for the bulk of group earnings–and quality of ore in its deposits allow the company to produce material profitably and at a significantly lower cost than competitors. The miner said an expansion of its business in the Pilbara to an annualized run-rate around 360 million tons was almost complete.
It said it is now squeezing out so-called incremental tons from its Nammuldi operation after expanding its rail and port capacity. Rio Tinto produced 309.9 million tons from its Australian operations last year. The company forecast global group shipments of roughly 350 million tons in 2016.
Rio Tinto recorded mixed output for its other divisions. Mined copper output fell 16% in 2015 to 504,400 tons, while hard coking coal production was 11% higher at 7.9 million tons.
