DJ Rio Tinto More Optimistic on Iron Ore Prices
Oct 11, 2012 (Dow Jones Commodities News via Comtex) --By Stephen Bell
PERTH--A Rio Tinto Plc (RIO) executive said Friday that the global mining company was becoming more optimistic about the outlook for the iron-ore market following a recent partial price recovery for the steel-making ingredient.
"We probably look forward with a little bit more optimism than we did perhaps a month or two ago when we were still in the midst of seeing declining prices and no-one really knew when it was going to bottom out," said Greg Lilleyman, President of Rio Tinto's Pilbara iron-ore operations.
Meanwhile, Rio Tinto has noticed a response from China's mining sector to the lower prices, including the "exit" of some higher-cost Chinese iron-ore producers, Mr. Lilleyman said at a seminar in Perth.
"We believe that will hopefully help in limiting further downside in prices," he said.
Prices should also be supported by slower-than-expected growth in seaborne iron-ore supply due to rising costs and project delays in several countries, including Australia, he said.
Rio Tinto, unlike some of its Australian competitors, hasn't chosen to slow down expansions of its Pilbara iron-ore business in response to the lower prices. Its current expansion, to 353 million metric tons a year, is due to come on stream in 2015.
However, earlier this week Rio Tinto pledged to tackle costs across its operations and said it wasn't likely to approve any big, new capital-intensive projects in the near term in view of a slump in commodity prices and a faster-than-expected cooling of China's economy.
The miner still expects to invest roughly US16 billion in capital projects this year, but spending would likely decline in the coming years, the company said.
-Write to Stephen Bell at djnews@dowjones.com
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10-11-12 2221ET
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