SYDNEY: Global mining giant Rio Tinto posted a 17 percent rise in third quarter iron ore production, remaining on track to meet full year guidance of 340 million tonnes.
Rio announced on Friday it shipped 91.3 million tonnes of iron ore in the three months to September while production was up 12 percent at 86.1 million tonnes.
The mining giant drew on stockpiles from both its Australian and Canadian operations – four million tonnes and one million tonne respectively – to boost sales.
Rio was forced to pare back a previous production target of 350 million tonnes earlier in the year following unseasonal weather events, including two cyclones, near it’s Australian mines.
Along with rivals BHP Billiton and Brazil’s Vale, Rio Tinto has been increasing production despite falling iron ore prices in an effort to corner the global market, forcing out higher cost producers.
The glut in global iron ore supply has seen prices drop from a high of nearly 200 U.S. dollars per tonne in 2011 to forecasts of below 50 U.S. dollars within two years. On Friday the spot price of iron ore for immediate delivery was 53.20 U.S. dollars per tonne.
Fortescue Metals on Thursday announced it shipped almost 42 million tones of iron ore for the September quarter, expecting 142 million tonnes for the Australian financial year below the current trading price for an average realized price of 50 U.S. dollars per tonne.
However, the Australian middle weight won’t need sell assets to remain competitive, Fortescue chief executive Nev Power said after reducing costs by 24 percent among other debt restructures, continuing to dismiss reports its been close to selling infrastructure to off-shore investors.
“We’ve been paying down debt and accumulating cash and that allows us to assess any potential asset sales on the basis of long-term value and terms,” Power said.
While debt stood at 6.6 billion U.S. dollars at the end of September, the company has 2.6 billion U.S. dollars cash on hand, Fortescue’s production report showed.
Power said he doesn’t expect demand to fall once Gina Rinehart’s 10 billion dollar Roy Hill mine beings shipping iron ore. However, he admits prices could still fall despite the recent price stability that reflects a general supply/demand balance.
“I don’t think there’s any floor,” Power said.
It’s been reported Fortescue’s break even price is around 37 U.S. dollars per tonne despite it being suggested the larger iron ore miners are on a drive to further lower their production costs to between 10 to 15 U.S. dollars per tonne in fear of deteriorating prices.
