SYDNEY: Anglo-Australian mining giant Rio Tinto on Tuesday recorded lower-than-expected iron ore output for the first three months of the year blaming poor weather conditions, but continued to boost its production of the commodity despite plunging prices.The world’s second biggest miner said iron ore production was 74.7 million tons in January to March, a 12-percent increase from the same period in 2014, but a six percent drop from the previous quarter.
Rio said shipments were up nine percent to 72.5 million tons year-on-year, although it was a fall of 12 percent from the October-December quarter that the firm said was due to the impact of Tropical Cyclone Olwyn and a train derailment at Dampier port in Western Australia.
“We continue to drive efficiency in all aspects of our business, which is reflected in our solid production performance during the first quarter,” chief executive Sam Walsh said.
“By making best use of our high-quality assets, low cost base and operating and commercial capability our aim is to protect our margins in the face of declining prices and maximize returns for shareholders throughout the cycle.”
The miner still expects to meet its 2015 global shipments target of nearly 350 million tons from its Australian and Canadian operations, drawing on its inventory to maximize cash flows.
Rio shares rose 1.70 percent to Aus$55.59 in Sydney.
Some of the world’s biggest iron ore miners, including Rio, were last week placed on “credit watch negative” by ratings agency Standard & Poor’s as ore prices tumble on the back of a supply glut and soft Chinese demand.
The price of the ore, a key ingredient in steel-making, has dived by 60 percent over the past 12 months to reach a decade-low of $47.08 in early April. It was trading just above $51 Tuesday.
The price weakness has been exacerbated by the world’s four biggest iron ore exporters—BHP Billiton, Rio Tinto, Vale and Fortescue. They make up 70 percent of the market and have kept lifting their production levels to maintain their share of exports.
Rio said copper output fell nine percent year-on-year while aluminum production remained stable compared to the same period in 2014.
Output in coking coal, another key ingredient in steel-making, rose 10 percent in the first-quarter of 2015 from January-March last year.
The World Steel Association said Monday China’s 2014 steel demand fell for the first time since 1995 as its government’s efforts to shift away from investment-led growth hit the real estate market.
The sector’s trade body said it expected Chinese steel use to decline by 0.5 percent this year and in 2016.