InvestSMART

Rio expected to delay expansion

JPMorgan predicts delayed iron ore expansion, stoking supply concerns.
By · 12 Jul 2013
By ·
12 Jul 2013
comments Comments
Upsell Banner

Rio Tinto Ltd is increasingly expected to delay a $5.4 billion expansion of its Western Australia iron ore operations as the miner continues to cut back on spending and costs, according to The Australian.

An analysis by JPMorgan of Rio's plans to introduce the final 70 million tonnes of annual iron ore production in its expansion plans resulted in a prediction that Rio will delay its iron ore expansion by three years from its current 2016 target (see Tim Treadgold's Re-examining Rio).

“The decision to add 70 million tonnes a year of mine capacity appears to be taking longer than previously outlined by the company, suggesting Rio may be pursuing a go-slow option” JPMorgan analyst Lyndon Fagan said, according to The Australian.

“On the basis, medium-term physical markets may be tighter than most investors anticipate; our revised Rio projections would result in global iron ore moving into deficit in 2016.”

The prediction further stokes concerns that global iron ore markets could be left under-supplied, while also supporting Arrium chief executive Andrew Roberts' claim that those predicting slumping iron ore prices are factoring in too much fresh supply.

Google News
Follow us on Google News
Go to Google News, then click "Follow" button to add us.
Share this article and show your support
Free Membership
Free Membership
Staff Reporter
Staff Reporter
Keep on reading more articles from Staff Reporter. See more articles
Join the conversation
Join the conversation...
There are comments posted so far. Join the conversation, please login or Sign up.