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china's demand for iron ore softens

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    China's demand for iron ore softens

    10-November-08 by AAP & Russell Quinn

    Rio Tinto's 10 per cent cut to iron ore production levels in WA, being blamed on a slowdown in Chinese demand, has mirrored similar moves made by major iron ore producer's around the world.

    The move from Rio, the world's second largest iron ore producer, mirrors a decision last month by the world's largest iron ore producer, Brazil's Vale, to reduce output by 30 million tonnes a year in response to softening demand.

    Rio Tinto chief executive Tom Albanese said the reduction was to align production with revised customer delivery requirements in light of the fourth quarter drop in Chinese demand.

    "We believe this will be a short, sharp slowdown in China, with demand rebounding over the course of 2009, as the fundamentals of Chinese economic growth remain sound," Mr Albanese said in a statement.

    Rio Tinto will cut iron ore production from its Pilbara mines in Western Australia by ten per cent per year and has revised its iron ore shipments for 2008 to between 170 million tonnes and 175 million tonnes.

    Steel companies worldwide have initiated a significant cut to production amid the global financial crisis leading to a weakening demand for iron ore, a key steel-making ingredient.

    Mount Gibson Iron Ltd has been forced to sell its iron ore at a significant discount and will cut a third of its workforce after some of its customers defaulted on binding offtake agreements last month.

    "I think you'll definitely see BHP come out with some news. They'll have to now," DJ Carmichael analyst James Wilson told AAP.

    "There is an oversupply (of iron ore) in the Asian ports at the moment and there are no surprises these guys are cutting production."

    BHP Billiton Ltd, the world's third largest iron ore producer, said there was no plans to cut output at this stage, however.

    "We have no plans to cut production," BHP Billiton spokesman Peter Ogden told AAP.

    The company is expected to produce about 137 million tonnes of iron ore from its Pilbara operations this financial year, up from 122 million tonnes in the previous corresponding period.

    A spokesperson for Fortescue Metals Group Ltd, Australia's third largest iron ore producer, said there was no intention to cut production at this stage.

    Rio Tinto shares had gained $5.15, or 7.13 per cent to $77.42 by 1109 AEDT, BHP Billiton put on $1.77, or 6.34 per cent to $29.70, Fortescue Metals added eleven cents to $2.71, while Mt Gibson added two cents, or 5.26 per cent, to 40 cents.

    FMG to shut down Pilbara port and plant

    10-November-08 by AAP

    Iron ore miner Fortescue Metals Group says it has brought forward a planned shut down of its Pilbara port and mine processing plant facilities as part of an optimisation program, and warns this will impact its calendar year performance.

    "The short term impact of the shut (down) will be for lower tonnages over the immediate term, which will impact the the overall performance for calendar year 2008," the company said in a statement.

    Fortescue was being sought for comment as to whether the planned shut down would affect employment levels.

    Fortescue's optimisation program aims to increase infrastructure capacity to 55 million tonnes per annum (Mtpa).

    The company began mining mid-May this year and recently delayed its plan to expand to 80 Mtpa due to reduced demand for iron ore from China.

    It previously planned to reach 80 Mtpa in calendar 2009 but is now targeting the 2009/10 financial year.

    Mining giant Rio Tinto Ltd today announced it would cut annual production of the steel making commodity by ten per cent because of the slowdown in Chinese demand.

    Fortescue said it had scheduled a roughly ten day shut down of the Port Hedland wharf and processing plant, commencing November 17.

    "During this time, mining and stockpiling will continue at full production capability," it said.

    The key objectives for the temporary shut down include commissioning a lump circuit, which will come on stream progressively over coming months, and a wharf upgrade to optimise load-out capacity.

    "The medium term outcome will be higher production and loading volumes and efficiencies to be timed for a return to more normal market conditions expected for 2009 and beyond," Fortescue said.

    It said current market conditions in China highlighted "the increasing focus steel mills are making on the `value in use' proposition for different product types".

    It said the commissioning of a de-sand plant would enhance its product offering, allowing for the mining and beneficiation of material containing higher than normal impurities.

    It said certain constraints had challenged its target to mine 22 Mt to the end of December this year, with an approximate 10 per cent reduction now likely.

    Shares in Fortescue were up eight cents, or 3.08 per cent, to $2.68 at 1200 AEDT.



    Rio cuts iron ore output by 10 per cent

    10-November-08 by AAP

    Rio Tinto will scale back production of iron ore at its operations in Western Australia's Pilbara region by 10 per cent due to weakening demand from China.

    Rio said it had today revised its iron ore shipments from the Pilbara to between 170 million tonnes and 175 million tonnes in 2008.

    The annualised run rate of iron ore production from its Pilbara mines will be reduced by 10 per cent, Rio said.

    Chief executive Tom Albanese said operations were performing well but demand had continued to decelerate.

    "This reduction is a prudent move to align production with revised customer delivery requirements in the light of the fourth quarter drop in Chinese demand," Mr Albanese said in a statement.

    "We believe this will be a short, sharp slowdown in China, with demand rebounding over the course of 2009, as the fundamentals of Chinese economic growth remain sound."





 
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