Rio Tinto’s Iron Ore group is the second largest producer supplying the global seaborne iron ore trade, having expanded its capacity over the past decade in tandem with the rise of China as the world’s largest and fastest growing single market. The group is the largest single contributor to Rio Tinto’s earnings, and remains ideally placed to take advantage of the continued recovery and growth of the world’s leading economies.
Sam Walsh, chief executive, Iron Ore and Australia. See biography
For more information see production and reserves
| US$ million | |
|---|---|
| Revenue | 12,598 |
| Operating cash flow | 7,389 |
| Underlying earnings | 4,126 |
| Capital expenditure | 2,148 |
| Net operating assets | 11,263 |
Operating cash flow contribution
Underlying earnings contribution*
2007-2009 US$m
- * A reconciliation of the net earnings with underlying earnings for 2008 and 2009 as determined under EU IFRS is set out in the Group financial performance. All amounts presented by the product groups exclude net interest and other centrally reported items.
Strategy
- The strategy is to maximise the return to shareholders from iron ore assets worldwide.
- Focus will remain on reducing costs and building on cash generation initiatives.
- Increasing or maintaining return from existing assets through brownfield developments where possible, particularly to contribute to sustaining capacity.
- Advancement of expansions under study to achieve 330 million tonnes per annum capacity in the Pilbara by 2015, within ongoing capital expenditure constraints.
- Continue detailed planning on integration for implementation of the proposed Pilbara production joint venture with BHP Billiton, as various regulatory approvals are sought.
Achievements
- Global iron ore production of more than 217 million tonnes (Rio Tinto share 171.5million tonnes), a 12 per cent increase on 2008.
- Maintained integrity of operations despite weather and global financial crisis setbacks.
- Milestone of three billion tonnes exported from Rio Tinto's operations in the Pilbara.
- Yandicoogina became the first mine in Australia to record 50 million tonnes annual production.
- Operations Centre established for remote control of mines, rail and ports.
Key priorities
- Achieving a proper, expeditious and fair resolution of the case of the four Shanghai colleagues detained by China in July 2009.
- Building on 2009's success in removing bottlenecks to achieve sustained production at or above nameplate capacity.
- Fully extracting benefits from operations integration through advances such as the Operations Centre and improved planning and scheduling.
- Continuing to improve the business' safety performance, notwithstanding the escalation of business activity and expansion work.
- Securing approval for and implementing the proposed production joint venture in the Pilbara with BHP Billiton.
- Advancing the Orissa, India, and Simandou, Guinea, development projects.
Outlook
- The outlook for global iron ore remains very positive, with seaborne iron ore trade continuing to expand to meet major Asian demand.
- Growth fundamentals remain unchanged from before the financial crisis, and continue to be dominated by the rise of China, where urbanisation continues apace.
- China's increase in steel intensity is following or exceeding market expectations, and Rio Tinto expects steel consumption to double by 2020. India is expected to follow that same path, though at a less rapid pace.
- Growth in the more stable markets of Japan, Korea, Taiwan, Western Europe and North America should remain relatively constant.