Performance
Financial performance
2008 compared with 2007
RTIO's contribution to 2008 underlying earnings was US$6,017 million, US$3,353 million higher than in 2007.
RTIO experienced strong demand for its iron ore during the first nine months of 2008. This was reflected in the 86 per cent weighted average pricing increase achieved in June 2008 following RTIO's agreement with China's Baosteel on the price for Hamersley iron ore deliveries for the contract year commencing 1 April 2008. During the final three months of 2008, however, RTIO experienced a contraction in demand for its iron ore, due to the global economic slowdown and in particular slower economic growth in China. Despite this contraction in demand, RTIO's total shipments of iron ore for the full year 2008 were 153 million tonnes, nine million tonnes higher than in 2007.
Although the price for iron ore on the spot market decreased during the final three months of 2008, the impact of this decrease on RTIO was limited since the vast majority of RTIO's sales during this quarter were at annual prices under long term contracts. RTIO sold 15.8 million tonnes of iron ore at the spot rate during 2008. However, most of these sales were made prior to the significant market deterioration from October 2008 and were consistently above the benchmark contract price.
2007 compared with 2006
RTIO's contribution to 2007 underlying earnings was US$2,664 million, US$399 million higher than in 2006.
Demand for iron ore remained extremely strong across the product range throughout 2007, driven by the continuing robust growth in global steel demand and production, significantly exceeding seaborne suppliers' capacity to match. Total Chinese iron ore imports rose from 326 million tonnes to 383 million tonnes, accounting for more than 90 per cent of world growth. Hamersley Iron and Robe River in Australia operated at record or near record levels of production in 2007.
