Rio Tinto officials recently announced plans to bolster Australian iron ore production by 30% in 2015, despite prospects the move could weaken global prices.
Pending final board approval later this year, new CEO Sam Walsh said the 70 million metric ton (mt) annual increase—at a cost of $5 billion—will bring overall output to a 2015 total of 360 million mt annually. Rio reported its first annual loss ever in 2012 after a $38 billion buyout of Alcan immediately before aluminum values nosedived.
Since the CEO’s Q1 appointment, Rio has slashed hundreds of jobs while moving to sell off copper, coal and aluminum operations. The 13 assets constituting Rio’s Pacific Aluminum division have also been marked for what could be a multibillion dollar sale, according to industry analysts.
Despite concerns Rio’s move could saturate the market, the metal remains a hot commodity in China where its mills devour more than 1 billion mt annually. Industry observers noted demand in the world’s second-biggest economy remains unlikely to slow anytime soon. Indeed, overall Australian exports to the mainland surged to a record $7.5 billion high in Q1, led by iron ore shipments increasing 36% by volume, according to government data.