Sydney – Rio Tinto increased production of iron ore 11 per cent last year to a new record and is forecasting a further 6.8 per cent rise to 350m tonnes in 2016, despite the collapse in the price of the key steel ingredient.
Sam Walsh, chief executive of the Anglo-Australian miner, which last week said it would freeze pay for all staff this year, on Tuesday acknowledged the challenging market. He said the company would “continue to focus on disciplined management of costs and capital to maximise cash flow generation throughout 2016”.
The world’s second-largest iron ore producer shipped 336.6m tonnes of iron ore last year after mining 327.6m tonnes and selling 9m tonnes from stockpiles. It said bulk inventories were now largely exhausted.
The miner’s actual share of returns is about 80 per cent of total production after accounting for joint venture partners at some mines.
Rio Tinto — in line with other major iron ore miners — has continued to ramp up production in spite of slumping prices. Iron ore, which accounts for the largest share of Rio’s profits, has fallen more than two-thirds since early 2013 on an expansion in supply and lower demand.
Rio said it achieved average iron ore pricing of $48.40 per wet metric tonne on a free-on-board basis in 2015 compared with $84.30 a year earlier.
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