SYDNEY (AFP) – Rio Tinto said Wednesday its September quarter iron ore production soared to a record high, as criticism mounts that mining giants’ rising output is adding to a global supply glut and depressing prices.
The world’s second-largest mining firm reported a 12 per cent year on year jump in its third-quarter iron ore production to 76.8 million tonnes.
Global iron ore shipments for the three months to September also hit new highs, surging 15 per cent to 78.0 million tonnes.
The boost came as sales from the Pilbara region in Western Australia continued to exceed production in the quarter, as the stocks that were built in anticipation of an infrastructure expansion were drawn down, Rio said.
“We have delivered another strong quarter with record iron ore production and a solid performance in copper and aluminium,” chief executive Sam Walsh said in a statement.
“Our strategy of focusing on long-life, low-cost assets means we will continue to generate strong cash flows despite a lower price environment, resulting in materially increased and consistent cash returns to shareholders.”
Global production guidance for iron ore was unchanged at 295 million tonnes on a 100 per cent basis, subject to weather constraints. Global shipments for 2014 were expected at approximately 300 million tonnes on a 100 per cent basis, Rio added.
Shares in the Anglo-Australian miner were up 1.38 per cent in morning trade at A$61.58.
The update came as Colin Barnett, premier of Western Australia – home to some of Rio and rival BHP Billiton’s biggest mines – said what he did not expect the companies to do when there was a sharp fall in price “is pour more iron ore into a very depressed market”.
“That is not commercially sound for them and their shareholders, and it is not good for the state,” he told state parliament on Tuesday, adding: “We want them to be sold at a valuable, true market value.”
Iron ore prices have slumped 40 per cent since January to a five-year low owing to a supply glut as miners lift output on expectations of continued Chinese demand.
The weaker price has hit Australian federal and state government coffers, reducing royalties and tax revenue.
Rio also lifted its full-year production guidance for copper to 615,000 tonnes from 585,000 tonnes as mined production increased 15 per cent in the year to September.
The higher guidance follow improved recoveries at Rio’s Kennecott Utah Copper mine in the United States and its Oyu Tolgoi site in Mongolia, the firm said.