Grupo Mexico’s net profit jumps 34%, boosted by copper output
Copper production during the quarter totaled 270,747 metric tons, up 4.7% from a year earlier.
Rio, which is Australia’s biggest iron ore exporter, has been a massive driver of expansions, adding millions of tonnes of seaborne supply to the market in the last year.
Rio Tinto (ASX:RIO), the world’s second-largest iron ore miner, defended its strategy to keep ramping up output against calls for production caps, saying the decision will actually help the company thrive.
At the company’s annual general meeting in London, chairman Jan Du Plessis acknowledged slumping commodity prices were placing rival producers under “significant distress,” but argued Rio’s decision to lift production was “rational, normal economics”.
“In times of increased market volatility, investors seek strength, reliability and consistency and, in such times, Rio Tinto thrives,” Du Plessis said according to AAP.
Bumps along the road
Chief executive Sam Walsh told shareholders in London he expected “continued bumps before the market settles” but added Rio was well placed to deal with the volatility given it had a robust balance sheet.
“I know there’s a lot of controversy, I know that there’s a lot of late entries into the market who have taken advantage of higher prices and they’re now feeling the impact of that as prices have come down,” Walsh was quoted by Bloomberg as saying.
He noted that after achieving an industry-leading $19.50 a ton last year, currency movements and a drop in fuel costs mean Rio’s iron ore costs are now running closer to $17.
Slippery slope
Ratings agency Standard and Poor’s has put eight of the world’s largest iron ore producers — including Rio and BHP Billiton — on negative watch following the steady plunge in prices.
Even Australia’s treasurer Joe Hockey has warned that the federal budget could suffer a $30bn revenue write-down over the next four years because of the iron ore price drop.
But none of these factors seem to bother Rio Tinto.
Meanwhile, higher cost rivals struggle. Atlas Iron was forced to mothball its mines and BC Iron has warned that it might have to do the same.
Nev Power, the CEO of Australian Fortescue Metals (ASX:FMG)—the world’s fourth-largest iron ore exporter by volume— summarized the situation best: “The current state of the iron-ore industry has been a disaster for everyone,” he told the WSJ on Thursday. “It has ripped the heart out of the industry. There are no winners in any of this.”
3 Comments
The Observer
Pure greed, rules the day. Rio has cut back on everything, first to go was safety, an unnecessary cost, now Rio sites are as dangerous as 3rd world country’s mines. Then loyal employees, who have given their best for years, now their family’s are getting divorced under their financial pressure.
It will only get worse, in 4 months when Gina Rinehart’s, Roy Hill starts pumping it out, to justify the money she borrowed, she will kill the Iron Ore price, maybe down to $35 per tonne or less.
NorthAfricanMiner
Indeed, even if they cash cost at 17$/t, it is a bunch of BS, the moment the oil price recovers to a mere 60-70$/bbl their operational savings (shipping and fuel) and meager margins will dissipate, not considering sustaining costs and others bits and pieces.
The underlying message is, we have some savings (and expect investors to pump in some more money), we plan to hold our breath as long as we can (“there will be some bumps ahead”) hoping our competitors will die before we do.
The Australian prime minister goes to China and tell them about their “friendly” relationship and how they should improve trade relations…………meanwhile all the Chinese projects in Australia they are going sour, thanks to some lack of “cultural flexibility”.
Just have a look at the 13th Five Years Plan of the Chinese Government, big troubles are brewing ahead for the Bigs muscle stretchers…….trying to sell mistakes as foresighted strategy.
The Government dealing with a bout 30 Bil $ budget deficit, Australians are beginning to have a taste of “corporate Australia loves you”.
PS: if someone wants to have a laugh, look at some of the Roy Hill presentations going around to investors and to the Chinese as well………..bearing the statement:”You can’t compete with Roy Hill !!!”. In the mean time Gina tells the Government that they should reduce burdens on corporates otherwise Australia might become an economically third world country. While they are getting ready for the next move the Chinese must be laughing all their way to the office in the morning.
By the way I do not believe is greed, as greed implies the compulsory desire making more and more money, is just pure and plain lack of vision.
Car Freak
I wonder whether shareholders and stakeholders will support this downright twisted vision… I think this gentleman chairman must be let go…