“I’m not sure where Colin is coming from”, Rio Tinto boss hits back at collusion claims

Rio Tinto boss Sam Walsh said West Australian Premier Colin Barnett shouldn’t complain about the company’s strategy to increase production seeing as the government signed off on the plan.

Yesterday Barnett questioned Rio Tinto and BHP Billiton for expanding their Pilbara iron ore production despite weakened prices and a sluggish market.

The premier called the policy flawed and claimed the two major miners were working together to keep prices down.

Rio Tinto refuted the claims, and Walsh told the SMH he could not understand Barnett’s criticism.

"I'm not sure where Colin is coming from in that given that we've been very clear in our plans and our expansions are approved by government," Walsh said.

Walsh stood by Rio’s expansions plans, stating the company was a “great business” that will survive the current downturn.

"Rio Tinto is the lowest cost iron ore producer in the world," he said.

"Our cash costs are $US20.40 [per tonne] and when you are selling at $US84 you are still doing OK. We'll survive this."

Pointing to a four per cent increase in the price of iron ore this week, Walsh said players in a volatile market know how to position their businesses.

"It's ensuring you have tier-one high-quality assets and you are in the lowest cost quartile,” he said.

The iron ore price slide, which has lost 35 per cent since January, has caused fears lows of $US80 a tonne are the new norm as demand wanes and the aforementioned production increases flood the market with new supply.

But Walsh says demand is still strong and urbanisation and industrialisation in India, south-east Asia and China meant a positive long-term outlook.

“It’s a cyclical industry: we go through cycles we shouldn't panic when there's a blip in iron ore pricing," he said.

"As each of these countries goes through the same urbanisation and industrialisation, our commodities will be needed so Colin shouldn't worry.”

Earlier today Rio posted a 12 per cent iron ore production increase at its Pilbara operations.

The extra ore was driven by the miner’s expansion of its Pilbara operations, which reached the first full quarter of production at a 290 Mt/a run in the third quarter.

Rio confirmed its 360 Mt/a expansion is 75 per cent complete, with all rail, marine and wharf works now in place.

The expansion is expected to be complete by the middle of 2015 and Rio said it will generate “significant value for shareholders”.

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