Rio Tinto says the outcome of iron ore price negotiations with Chinese customers remain cloudy but could have a material effect on its profitability next year.
The global miner also says the main drivers of its second half earnings - the pricing for other key commodities including aluminium and copper - remains uncertain.
"The group expects to continue to sell a significant proportion of its iron ore on the spot market at least until the group has settled the benchmark prices," Rio Tinto said on Tuesday in its Australian offer document for its $US15 billion ($A18.87 billion) rights issue.
About half Rio Tinto's iron ore was sold on the spot market in the first five months of 2009.
The Rio statement regarding its profitability is seemingly at odds with media reports on Tuesday that said Macquarie Bank analysts had boosted their forecast for Australian contract iron ore prices by 15 per cent.
South Korea's top steelmaker POSCO and Rio Tinto last month negotiated a price cut of 33 per cent for fines iron ore and 44 per cent for lump iron ore.
Fellow mining giant BHP Billiton Ltd reportedly fell in line with this price cut earlier this month after negotiations with Japan's second largest steelmaker, JFE Steel.
The move followed Brazil's Vale agreeing to a 28.2 per cent cut for fine ore and 48.3 per cent for pellets with Nippon Steel and Kobe Steel of Japan, and POSCO.
Rio Tinto said on Tuesday that its 2009 guidance for iron ore production across its operations worldwide remained at about 200 million tonnes.
It expects a recovery in Chinese steel demand in the second half of 2009.
BHP Billiton chief executive Marius Kloppers is expected to visit Perth on Wednesday to discuss the miner's proposed iron ore joint venture with Rio Tinto in Western Australia's Pilbara region.
Source: Sydney Morning Herald
No comments:
Post a Comment