Why would we choose not to make money? Rio’s iron ore boss speaks out – by Vicky Validakis (Australian Mining – June 22, 2015)

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Rio Tinto’s iron ore boss Andrew Harding says long-term demand for the commodity is strong, but warned high-cost producers would not last long in the current market.

Speaking to Rio’s M2M magazine, Harding said while demand growth for iron ore isn’t as strong as it was, the long-term outlook was sound.

Pointing to the continued urbanisation of people in China, India, Africa, and South America, Harding said the need for steel would remain strong.

“As developing countries urbanise, and people move from rural to urban ways of life, infrastructure needs change. They build tall apartment blocks and link up the urban areas with roads, railway lines, airports and bridges – all using massive amounts of steel,” Harding said.

Harding also highlighted the importance of demand from the developed world in replacing ageing infrastructure.

“Even though Japan, for instance, has had no to very low growth for a considerable period, it’s still been importing around 130 million tonnes of iron ore every year,” Harding explained.

However, with the price of iron ore trading at $US60.90 per tonne, the iron ore boss said being a low cost producer was the key to surviving the market downturn.

“At Rio Tinto, we can make money on every tonne we sell, and we can indeed sell every tonne. So we will continue to make maximum use of the infrastructure we have installed for our operations,” Harding said.

Sounding a warning to juniors, Harding said miners at the opposite end of the cost-curve will go out of business unless they can cut their costs “dramatically”.

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