Rio Tinto Iron-Ore Shipments Set to Rise

SYDNEY-- Rio Tinto PLC's shipments of iron ore fell sharply in the first three months of the year, but the Anglo-Australian miner still expects 2015 to be another year of record sales.

The drop in cargoes of the steelmaking ingredient wasn't due to any decision by Rio Tinto to slow output as a glut of the commodity swells. Shipments, largely destined for steel mills across Asia, were instead hampered by wet weather and a train derailment in the iron-rich northwest of Australia.

Rio Tinto has been aggressively expanding its iron-ore production in the country's Pilbara mining region, drawing ire from smaller rivals and politicians who say the miner and some of its peers are devastating the once-thriving industry by flooding the market.

Iron-ore prices have tumbled more than 60% since the start of last year, leading to mine closures and worker layoffs.

While Rio Tinto's first-quarter iron-ore shipments were down 12% from the quarter before, at 72.5 million metric tons they were 9% higher than the same period a year earlier. In addition to its Australian mines, Rio Tinto operates an iron-ore business in Canada.

Rio signaled it will compensate for the weaker start to 2015 to ensure it meets a previously announced full-year target of up-to 350 million tons.

That will feed concerns the seaborne market will be saturated by another wave of new supply in the months ahead-including billionaire Gina Rinehart's new 55 million-ton-a-year Roy Hill mine in the Pilbara.

Analysts have been downgrading their iron-ore price forecasts on the expectation Asia's appetite for the commodity won't be enough to soak up the extra supply. It closed at $50.80 a ton on Monday.

Rio Tinto's 2015 target is already a sharp increase from the 303 million tons it shipped in 2014.

The company runs the second-largest iron-ore export business in the world, largely from Australia where it has 15 mines, four port terminals and runs the largest privately-owned railway in the country.

It has repeatedly defended its widely criticized strategy to keep increasing production, first outlined when prices were booming on China's breakneck growth. The miner has stuck by its plans to increase its output from the Pilbara alone to 360 million tons within the next couple of years, from around 280 million in 2014.

Rio's iron-ore chief executive Andrew Harding argues the miner is operating in "a competitive, international marketplace" and that other miners would increase their own production if his unit was to curb output.

Write to Rhiannon Hoyle at [e-mail]

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