🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Rio Tinto watching for revival in China iron ore mining

Published 04/05/2017, 04:14 pm
Updated 04/05/2017, 04:20 pm
© Reuters.  Rio Tinto watching for revival in China iron ore mining
BHP
-
FMG
-
RIO
-
BHPB
-
RIO
-
VALE3
-

By James Regan

SYDNEY, May 4 (Reuters) - Global miner Rio Tinto RIO.AX RIO.L said on Thursday it is watching for signs of a revival in domestic iron ore mining in China later this year to reduce reliance on imports amid firmer ore prices.

Rio Tinto is a top exporter to China of the steel making raw material, which accounts for the lion's share of profits for the mining house.

"The key source of uncertainty is around - when you move to the end of the summer - are they (China) going to restart some of their mines," said Rio Tinto Chief Executive Jean-Sebastien Jacques, following his company's annual general meeting.

China's mines - largely less efficient than those in Australia and Brazil due to lower iron ore content - began cutting annual capacity from around 300 tonnes three years ago in line with falling iron ore prices, bottoming out at 250 million tonnes at the end of 2016, Jacques said.

But higher prices have made a revival in domestic mining more likely, allowing Chinese steelmakers to reduce raw material import costs and generating profits again for the mines.

The spot benchmark .IO62-CNO=MB , which touched a 30-month peak of $94.86 in February, has eased around 13 percent this year, but iron ore still sells well above the sub-$40 a tonne plumbed in late 2015.

A rise in domestic ore could give mills some leverage to push for better deals on imports from Rio Tinto, Vale VALE5.SA and BHP Billiton BHP.AX BLT.L , which dominate the seaborne iron ore market.

"We've got around 200 people in China, in Shanghai and Beijing, and that is a big chunk of their work - to find out exactly what's happening in the marketplace," Jacques added.

The comments come as Australian miners maintain near-record shipments of iron ore to China and inventories at Chinese ports swell.

April shipping figures from Australia's Port Hedland, used by BHP and Fortescue Metals Group FMG.AX , showed an 11 percent rise in exports to China to nearly 35 million tonnes. stockpiles of imported iron ore at China's major ports topped 130 million tonnes as of Friday, up 950,000 tonnes from the previous week, and are not far off record levels. SH-TOT-IRONINV

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.