Iron ore price weakens as Australia flags return to sub-$100 prices
Futures dropped for a fourth day in Singapore, to trade about 3% lower for the week.
As plummeting iron ore prices weighed on Rio Tinto Group’s stock for a seventh-straight trading day, CEO Jean-Sebastien Jacques defended the miner as a “cash machine” that will keep rewarding shareholders.
“We have a cash machine,” the chief executive officer said Thursday in an interview on Bloomberg TV. The “strong quality of the asset portfolio will generate cash no matter where we are in the cycle.”
“Strong quality of the asset portfolio will generate cash no matter where we are in the cycle”
CEO Jean-Sebastien Jacques
The world’s second-largest miner had been on a roll this year, with a strong first half anchored by surging prices for iron ore more than offsetting operational setbacks at its top-earning business. But prices for the key steelmaking ingredient have tumbled this month, and taken Rio with it. The London-based company’s shares have fallen 12% since July 30.
Another looming hurdle for Rio has been slowing growth in China, by far the world’s biggest steel producer. Jacques tried to ease those concerns by saying that the Asian nation would use stimulus spending to maintain steel production, including by rebuilding older cities.
“One thing that maybe people don’t see clearly is China is launching, or is going to launch, a program to renew the cities, the buildings that were constructed 10 years ago, 20 years ago, 30 years ago,” Jacques said. “We fully acknowledge that China is slowing down, but as expected China is managing the slowdown pretty well.”
(By Matt Townsend, Joe Deaux and Jonathan Ferro, with assistance from Thomas Biesheuvel)
Comments