MELBOURNE: Global miner Rio Tinto reported one of its biggest quarterly falls in iron ore output yesterday after demand from Chinese steel mills slumped late last year, but sales met its own reduced target.
Rio Tinto, which is slashing costs and selling assets to help pay down debt, reported an 18 fall in fourth-quarter iron ore output to 31.8 million tonnes, while sales from its Western Australian iron ore mines, which more closely reflect demand from Chinese steel mills, slid 23 to 33.6 million tonnes.
The drop plays into the hands of Chinese mills which are pressing for a 40 cut in contract prices from Rio Tinto, Brazil’s Vale and BHP Billiton, to reverse last year’s neardoubling in contract prices.
”We are taking firm action in response to the global economic downturn and, given the resilience of Rio Tinto’s low cost assets, expect to remain well positioned when recovery comes,” chief executive Tom Albanese said in a statement.
The world’s fourth-biggest diversified mining group delivered no major surprises in its December quarter operations report, but said aluminium profits would be hurt by falling prices and it would also write down stocks to reflect the weaker prices.
Rio Tinto had flagged in November that it would cut its annual iron ore production rate by 10, paring its annual shipments target to between 170 million and 175 million tonnes. Sales for all of 2008 came in at 171.4 million tonnes.
On an annual basis, iron ore production grew 6 in 2008, the weakest pace in four years, and a Rio Tinto official said it was probably the biggest ever quarterly fall, year-on-year, but he could not confirm this.

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