Rio Tinto chief vows to con­tinue cut­ting costs

China Daily (Canada) - - VIEWS - By YANG ZIMAN yangz­i­man@ chi­nadaily.com.cn

Rio Tinto will con­tinue to re­duce its pro­duc­tion costs as an over­sup­ply in iron ore is ex­pected to last for seven to 10 years, said Jean-Se­bastien Jac­ques, chief ex­ec­u­tive of­fi­cer of the com­pany.

“Rio Tito’s strat­egy has not changed, which is to keep our iron ore prod­ucts at very low cost so that what­ever the con­di­tion is, we will re­main prof­itable,” Jac­ques told China Daily in a group in­ter­view on Tues­day.

Jac­ques, who took the helm at Rio Tinto in July, said that the com­pany has re­moved $6 bil­lion of costs from its sys­tem since 2012.

The iron ore spot price was around $58 per met­ric ton in mid Oc­to­ber, com­pared with $184 per ton in Jan­uary 2011.

The com­pany’s iron ore sales vol­ume in the third quar­ter fell by 5 per­cent year-on-year to 80.9 mil­lion tons, com­pared with the fore­cast 83.5 mil­lion tons. Its out­put in­creased 2 per­cent year-on-year to 83.2 mil­lion tons.

The com­pany fore­casts to­tal an­nual iron ore out­put of be­tween 325 and 330 mil­lion tons.

Jac­ques said that he is “cau­tiously op­ti­mistic” about the prospects for the Chi­nese econ­omy.

“China is very im­por­tant for Rio Tinto as our largest cus­tomer in iron ore and our largest share­holder — Chalco (Alu­minum Corp ofChina Ltd) holds around 10 per­cent of Rio Tinto’s shares,” he said.

Wang Liqun, vice-pres­i­dent of the China Iron & Steel As­so­ci­a­tion, said ear­lier that 86.7 per­cent of the coun­try’s iron ore was im­ported in the first two months of this year, com­pared with 64 per­cent in 2010.

“Three years ago, China’s an­nual iron ore out­put was 400 mil­lion tons. This year, pro­duc­tion is ex­pected to be 230 to 250 mil­lion tons. The dif­fer­ence of 150 mil­lion tons must be reached by im­ports from Aus­tralia and other places,” said Jac­ques.

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