When Rio Tinto Group’s Sam Walsh, head of the world’s second-biggest iron-ore exporter, was asked 10 months ago whether the steelmaking raw material could reach $30 a metric ton, he derided it as impossible.
“That’s fantasy land — it simply can’t happen,” Walsh, 65, said in a February interview with Bloomberg Television. “There are very wild forecasts out there that quite frankly just can’t come to pass, otherwise it’s going to be very lonely for us as the lowest-cost producer in the world.”
The comments by Walsh, who headed Rio’s iron-ore business for nine years and is regarded as a veteran in the industry, shows how the pace and depth of the market’s retreat has caught the world’s biggest mining companies off guard.
The strategy of Rio and rivals BHP Billiton Ltd. and Brazil’s Vale SA has been criticized by smaller competitors and governments for driving down the price by flooding the market with low cost supply.
Iron ore for delivery to Qingdao port in China fell 2.4 percent to $39.06 a ton on Monday, the lowest since Metal Bulletin began providing daily data in 2009.
It’s plunged 45 percent this year, and is 23 percent from $30.
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