Fin24

Rio Tinto iron ore output flattens

2012-01-17 07:57

Sydney - Global miner Rio Tinto has reported near-flat production growth of iron ore in the fourth quarter, undershooting market expectations amid concerns that Chinese demand is softening.

Rio Tinto, the world's second-biggest producer of iron ore after Vale of Brazil, reported a 3% rise in output between the third and fourth quarters of 2011, compared with a growth rate of nearly double that at the end of 2010.

That was much less than expected, with some mining analysts having tipped increases by as much as 20% as the company continues to expand its iron ore operations, based predominantly in the northwest of Australia.

Rio Tinto gave no detailed commentary on demand in releasing its production data for the December quarter, but there have been market concerns that China's commodity imports will drop off this year as domestic growth eases.

Earlier on Tuesday, Chinese data showed the world's second-biggest economy grew at its weakest pace in two-and-a-half years in the latest quarter and it appeared headed for an even sharper slowdown in the coming months.

However, Rio Tinto and its major iron ore rivals Vale and No 3 BHP Billiton [JSE:BIL] are counting on strong long-term Chinese demand to underpin multi-billion dollar expansion projects. Rio Tinto alone plans to spend $15bn this year on projects across its portfolio, with a large chunk of this expected to be spent in iron ore.