The world’s second largest mining company Rio Tinto Group said that its Q2 iron ore production surged by 11 pct followed by the expansion of operations in the Pilbara region, Western Australia.
The company said that the output was about 57.5 million metric tonnes in second quarter. In the previous months, it was 51.8 million tonnes. The company also expanded its full year copper guidance.
To meet the demand from China, Rio and BHP Billiton expanded its mined which leads to a 27 pct decline in iron ore price. Last year, Rio reported net revenues of about $9.9 billion from its iron ore division, which represents 88 pct of profit.
Evan Lucas, a Melbourne-based market strategist at IG Ltd said that what we had got to ask is whether the increased shipments and increased output was going to keep the depressed prices that they currently saw in iron ore. He added that copper was bouncing back and copper prices were back at levels the company would want, so that’s where we might see the offset to the fall in the iron ore price.
Chief Executive Officer Sam Walsh said that their iron ore expansion would continue to made high margin growth reinforcing their position as a low cost producer. The expansion of port infrastructure for expanding the iron ore output to about 360 million tonnes per annum is expected to be finished in the first half of 2015.
According to data from The Steel Index Ltd, iron ore with 62 percent iron content delivered to Tianjin increased 0.1 percent to $98 a dry ton during Tuesday. It lost 20 percent in the second quarter and declined to the lowest since 2012.