Rio Tinto cuts growth outlook for China
Source: Agencies |
October 10, 2012, Wednesday
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Print Edition
Print Edition
GLOBAL miner Rio Tinto cut its growth forecast for China and said it was stepping up efforts to trim costs, having already slashed US$500 million, as it faced an uncertain global outlook.
Rio Tinto, the world's second-largest iron ore miner with more than 80 percent of its earnings in 2012 expected to come from the metal, is heavily dependent on Chinese steel demand picking up and is counting on Chinese infrastructure investment plans to drive that demand.
"Significant stimulus efforts have been announced in China, the US and Europe, but it's uncertain exactly when we will see the impact of these on our markets," Rio Tinto Chief Executive Tom Albanese said yesterday.
"Given this, and the considerable price fluctuations in recent times, we are somewhat more cautious on the outlook over the next few quarters."
Rio Tinto trimmed its forecast for Chinese economic growth to just below 8 percent, from 8 percent previously, in tandem with the International Monetary Fund's revised forecast yesterday.
"Economic growth in China is robust but moderating, and is slow and uneven in developed economies," Rio said in a statement.
Iron ore prices slumped 42 percent from a high in April to a three-year low of US$87 a ton last month. While they have rebounded to US$110, prices remain well below a perceived floor at US$120, the point at which high cost Chinese producers would lose money.
Rio estimated around 100 million tons of Chinese iron ore production had become unprofitable and said it "sees evidence on the ground that a large proportion of this has already been curtailed."
Rio Tinto, the world's second-largest iron ore miner with more than 80 percent of its earnings in 2012 expected to come from the metal, is heavily dependent on Chinese steel demand picking up and is counting on Chinese infrastructure investment plans to drive that demand.
"Significant stimulus efforts have been announced in China, the US and Europe, but it's uncertain exactly when we will see the impact of these on our markets," Rio Tinto Chief Executive Tom Albanese said yesterday.
"Given this, and the considerable price fluctuations in recent times, we are somewhat more cautious on the outlook over the next few quarters."
Rio Tinto trimmed its forecast for Chinese economic growth to just below 8 percent, from 8 percent previously, in tandem with the International Monetary Fund's revised forecast yesterday.
"Economic growth in China is robust but moderating, and is slow and uneven in developed economies," Rio said in a statement.
Iron ore prices slumped 42 percent from a high in April to a three-year low of US$87 a ton last month. While they have rebounded to US$110, prices remain well below a perceived floor at US$120, the point at which high cost Chinese producers would lose money.
Rio estimated around 100 million tons of Chinese iron ore production had become unprofitable and said it "sees evidence on the ground that a large proportion of this has already been curtailed."
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