Rio Tinto Ltd/Plc could exceed an upwardly revised annual global iron ore production forecast, as its Australian mines produced at full tilt in the final months of 2009 following a slow start.

But the added tonnage scheduled to show up in Rio’s fourth quarter
production summary on Jan. 14 was unlikely to dampen red hot iron ore
prices, which have risen over 80 percent since the start of 2009, they
said.

“Now is the time to produce iron ore and Rio Tinto knows that,” said
James Wilson, a mining analyst with DJ Carmichael & Co in Perth.
“Rio Tinto and other iron ore producers are back on the front foot.”

Spot iron ore prices were quoted above $130 free on board, according the Steel Index.

Australia’s top iron ore miner and second biggest worldwide revised its
global output forecast 5-7.5 percent to 210-215 million tonnes in
October as iron ore demand recovered from the worst of the financial
crisis in early 2009.

Also, six weeks into the December-March cyclone season in the Pilbara
mining district only one gale-force storm that largely spared Rio Tinto
was recorded, enabling it to run its Australian mines without
interruption.

UBS in a report puts Rio Tinto’s 2009 global output closer to 216
million, given Rio said at the end of 2009 that its giant Yandicoogina
mine in Australia ran at a 50 million-tonnes-per-year rate versus 40
million in April.

JP Morgan estimates Rio produced 215.5 million tonnes in 2009, based on its fourth quarter estimate of 57,899 tonnes.

The full-year 2009 iron ore forecast would be more than 26 percent
higher than 171 million tonnes produced in 2008, an industry analyst
noted, adding that the company needs to mine an astounding 58 million
tones in the fourth quarter to reach the high end of its target.

Rio Tinto produced 157 million tonnes of iron ore in the first three quarters of 2009, a company spokesman said.

The fourth quarter estimate far exceeds the 39.796 million tonnes recorded in the first quarter, one of the worst for Rio Tinto.

At the start of the quarter, Rio Tinto was forced to close all 11 Australian iron ore mines for several weeks as demand waned.

Around the same time major flooding wiped out the train network serving its Robe River mines.

This was followed by a six-week idling of the Canadian mines due to low
demand and the sale of its Corumba iron ore mine in Brazil to pay off
debt.

Next year Rio Tinto hopes to increase iron ore production capacity to
230 million tonnes, followed by a much bigger jump to 300 million
tonnes in five years, a company spokesman said.

Fellow Pilbara miner BHP Billiton Ltd/Plc is targeting a 31 percent
output gain to 205 million tonnes by 2011. Fortescue is aiming to lift
annual production to 45 million tonnes from 38 million this year.

Smaller miners Atlas Mining and BC Iron are also planning incremental production increases.

Source: Reuters

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