Rio Tinto remains on track to expand its iron ore operations despite earlier indications from the mining giant's CEO, Tom Albanese, that at a certain period the company will temporarily slow down on its output plans.
One possible implication of this policy is that Rio may possibly not open new mines ir expand after current projects are finished even if demand for iron ore remains healthy or steady.
With this development, the lower end of the projected annual exports for iron ore could go down to 300 million tonnes in 2018 from the previous forecast of 360 million in May provided by Rio Chief Executive Sam Walsh, Rio Iron Ore Development Chief David Joyce told analysts in Perth on Monday.
However, the upper end remains at 375 million tonnes.
Despite the adjusted forecast for the lower end of annual production for iron ore, Rio had approved the expansion of its Pilbara iron ore railways and ports on the assumption of handling 360 million tonnes annually, but its approved mine expansion is up to 290 million tonnes only.
Rio estimated that the revenue cost of not pursuing extra mine expansions would be $7 billion a year based on a 30 per cent lower iron ore price of $100 per tonne.
The lower forecast were due to the projected lower commodity prices and Rio changing its focus from growth to cost cutting and capital management.
On Monday, Rio started to load the first shipment of iron ore from its expanded Pilbara operations in Western Australia.
Andrew Harding, Rio Iron Ore Chief Executive, said the giant miner would continue to pursue further productivity improvements from its fully integrated Pilbara system to maximise return on investment.
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