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rio, fortescue cut iron ore production

  1. 1,404 Posts.
    From the Age : going to be tough.

    news about funding in Q1 2009, I hope.

    Rio Tinto and Fortescue Metals have both slashed iron ore production by 10% amid an increasingly weak market for the steelmaking material.

    Rio this morning said it expected to ship 170 million to 175 million tonnes of iron ore this year, down from earlier expectations of about 195 million tonnes.

    Less than a fortnight ago, Brazilian rival Vale cut its iron ore production by 10%, or 30 million tonnes, meaning about 50 million tonnes of iron ore has been removed from the market.

    Fortescue shuts plant

    Fortescue Metals has lowered its annual production target by 10%, or 2 million tonnes, as it brings forward a planned maintenance shutdown of its port and mine processing plant.

    The iron ore miner said today it planned to meet its target of an annual rate of production of 55 million tonnes a year by the first quarter next year "subject to market conditions''.

    Fortescue recently said a $2 billion project to expand output to 80 million tonnes a year could be delayed by six months in light of the weaker market for iron ore.

    BHP sticks to target

    BHP Billiton, the world's third-largest iron ore producer behind Vale and Rio, said it won't follow its rivals in reducing iron ore output.

    "We have no plans to cut production and our strong balance sheet enables us to reinvest throughout the cycle,'' BHP spokesman Peter Ogden said today.

    Rio shares rose 5% to $76.20 in early trading. BHP, which is targeting Rio in an all-share offer worth about $US70 billion, climbed 3.4%, to $28.88, while Fortescue added 4.2% to $2.71.

    BHP last week received a "statement of objections'' from the European competition regulator in reference to its bid for Rio and now would be an inopportune time for it to attempt to exercise any control over iron ore pricing.

    No job cuts expected

    A Rio spokesman told the Herald no job cuts were expected as a result of its plans to scale down operations.

    In a statement, Rio's chief executive, Tom Albanese, said the reduction would align production with "revised customer delivery requirements'' due to a fall in demand from China during the fourth quarter.

    "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,'' he said.

    Steel prices have collapsed in recent months along with demand as the global financial crisis strangled growth prospects and developed economies faced what some say could be their first full-year recession since World Wa
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