Iron Ore Price, page-1313

seems like RIO have miscalculated a little and shot its lot pinky off.

Rio Tinto’s Australian iron ore expansions that are weighing on prices and closing down higher cost production are putting the company’s higher-cost Canadian operations at risk of closure.

Rio’s 58.7 per cent-owned Iron Ore Company of Canada mine and plant in Newfoundland made a $US1 million ($1.36m) net loss in Rio’s half-year accounts last Thursday, as lower iron ore prices slashed what had been a (still small by Rio standards) $US97m profit a year earlier.

Managing director Sam Walsh and chief financial officer Chris Lynch have both told analysts the Canadian operations could be at risk if productivity plans are not successful.

Prices of iron ore are falling as Rio and BHP Billiton threaten more production from Western Australia; what’s more, Chinese demand is faltering and Vale is set to bring on more from Brazil.

Canadian analysts say IOC is losing money at current iron ore prices, but Rio has told London analysts the operation, through which Rio earned $US80m of first-half earnings before interest, tax, depreciation and amortisation (down from $US318m a year earlier), was making cash.