Rio Tinto will not be swayed from the path of iron ore expansion, shareholders heard at yesterday’s AGM.
Despite accusations from government, industry and the media that Rio Tinto has intentionally contributed to iron ore oversupply to knock out high-cost producers, CEO Sam Walsh said the company would push ahead with plans for expansion of Pilbara operations.
Walsh did addressed the concerns of high-cost miners with some sympathy, but expressed that Rio Tinto would stay ahead of such pressures.
“We take no comfort in what's happening to some of the smaller, higher-cost iron ore producers that are finding it hard to compete,” he said.
“Operating in a global commodities market has always presented cyclical challenges and today's weakened market is no different.
“We don't need to just consider what is happening in Australia, we need to keep in mind what is happening around the world and that is why we are working so hard to remain one step ahead.”
Walsh said only high-return Rio Tinto projects would proceed as they grow out capacity.
“This year in the Pilbara we will continue our low-capital-cost brownfield expansions as we grow out capacity,” he said.
“This will be achieved as a capital intensity of approximately $9.00 a tonne, continuing to confirm our competitive position as the world's lowest-cost supplier of seaborne iron ore.”
Chairman Jan Du Plessis denied it was the company’s intention to flood the market or put competitors out of business.
"We have no desire to take anyone out of business, and we are highly cognisant of the fact that this period is really painful, including for our own people," he told AFR.
He also expressed that any effort to artificially affect the market by co-operation would be beyond their control due to the illegality of such a proposition.
“The idea we can be kind to each other here in Australia is not on,” he said.
“Any suggestion that we should talk to our competitors in Australia is, of course, bluntly illegal.”
“It's a breach of Australian law, and therefore not something that we will contemplate.”