Column: China’s commodity import trend driven by prices, not economy
China's imports of major commodities are often viewed through the prism of the performance of, and outlook for, the world's second-biggest economy.
Rio Tinto (ASX, LON:RIO) has given investors fresh reasons to smile as the world’s second-largest miner beat its 2013 cost-cutting targets and reported Thursday record high output of iron ore, coal and other minerals.
The company is the first of the diversified mining giants to report its 2013 annual production figures, which showed strong growth despite industry concerns of weakening Chinese demand for steel and the impact of cyclone Christine in the Western Australia Pilbara region.
Rio, the world’s second-largest iron ore miner behind Brazil’s Vale, said production of the steel-making material reached 70.4m tonnes in the fourth quarter last year, a 6% increase compared to the same period of 2012. The commodity accounts for about 85% of Rio’s earnings.
Production of copper – Rio’s other key earner – jumped up 15% last year with 631,500 tonnes mined, well above expectations of 590,000 tonnes.
The mining giant also said it implemented $2bn operating cost cuts and slashed exploration costs by $1bn, exceeding the $750m target set for 2013.
The healthy figures triggered the biggest one-day rally for the miner’s shares since November. Shares in the company closed 2.09% higher than Wednesday on the Australian Stock Exchange at AU$65.6 each, while in London shares were up almost 3.8% hitting $3,374 pounds each at 9:30 am ET.
A few of the firm’s largest shareholders and former executives applauded Sam Walsh’s first year as CEO, with some stating they are ready to increase their stakes in the diversified miner.
