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Rio Tinto says iron ore production down 15 percent
Melbourne April 15, 2009 Mining giant Rio Tinto said first quarter iron ore production fell 15 percent Wednesday but predicted a recovery in Chinese steel demand in the second half of 2009. Rio said reduced market demand and heavy rainfall at its Pilbara operations in Western Australian meant iron ore production dropped 15 percent compared to the same period last year. "Markets remain volatile and the timing of global economic recovery uncertain," chief executive Tom Albanese said in a quarterly production report released ahead of Rio Tinto's annual general meeting in London on Wednesday. Albanese said Pilbara iron ore shipments fell nine percent to 39 million tonnes compared to first quarter 2008 but Rio was expecting Chinese demand to pick up later this year. He said Rio remained committed to a proposed deal with Chinalco for the Chinese state-owned firm to take a major equity stake in return for 19.5 billion US dollars. The deal is expected to be a major issue at the annual general meeting, with some institutional shareholders reportedly unhappy that they were ignored when the company struck its deal with Chinalco. The deal, which is still under review by the Australian government, would see Chinalco double its stake in Rio to 18 percent, allowing the miner to reduce its massive debt burden. Rio said bauxite production fell 19 percent in the first quarter, with alumina down two percent and aluminium down six percent. Mined copper production rose nine percent and refined copper production was up 33 percent, while Australian hard coking coal increased 32 percent and Australian thermal coal production fell two percent. The production report came as Rio informed the market it had carried out a 3.5 billion US dollar bond raising. "This issue is part of 'business as usual' capital management and the normal process of terming out existing debt facilities," chief financial officer Guy Elliott said. Deutsche Bank credit analysts said the bond issue showed Rio had an alternative way to deal with debt if the proposed Chinalco investment fell through. "The issue reduces refinancing risk in 2009 and provides support to an alternative recapitalization structure to the existing deal with Chinalco," Deutsche Bank said in a client note. Rio Tinto shares closed up 61 cents or 1.08 percent to 57.35 dollars (40.14 US). related report OZ Minerals signs off on revised Minmetals bid Australian miner OZ Minerals said Tuesday it had signed off on a revised takeover offer from China's Minmetals which would erase its debt and leave it with 500 million dollars in cash (366 million US). The 1.21 billion US dollar bid is well below Minmetals' original 2.6 billion dollar offer, and excludes the flagship Prominent Hill mine, as well as the Martabe project in Indonesia and exploration rights in Cambodia and Thailand . Canberra scuttled the first bid on national security grounds because it included the copper-gold mine at Prominent Hill, which is located near a military rocket testing range. OZ told the Australian Stock Exchange it had reached a binding agreement with state-owned Minmetals which would leave it with a cash balance of 500 million dollars. "Once implemented this transaction will provide a complete solution to our financing issues and see shareholders retain their OZ Minerals shares and therefore exposure to the Prominent Hill operation and its long-term growth profile," said OZ chief Andrew Michelmore. OZ said it had revised its original cash balance estimate down from 600 million dollars because of exchange rate movements and other adjustments. Subject to a shareholder vote, regulatory approvals from Beijing and the green light from Australia's foreign investments review board, OZ said it expected the deal to go through in mid-to-late June. State-owned Chinese corporations have made a number of bids for Australian mining assets in recent months, including a proposed 19.5-billion-US-dollar investment in mining giant Rio Tinto by Chinalco which is still under review. Hunan Valin Iron & Steel Group was allowed to increase its stake in iron ore miner Fortescue Metals Group to up to 17.55 percent, by investing more than one billion dollars (730 million US). Beijing's interest has sparked intense debate in Australia over whether to allow Chinese state-owned entities to increase their control over the country's resources. Share This Article With Planet Earth
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Global steel industry awaits China, US auto turnaround
Paris (AFP) April 12, 2009Steel is on edge and the global industry is cutting back hard, hanging on for either a budget blast from China, new credit for vast Middle Eastern building schemes or resurrection of the US auto industry. |
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