Rio Tinto on Thursday recorded big increases in production of iron ore and other minerals it sells mainly to China, betting the country's massive economic growth will provide a ready market for decades to come.
The world no. 2 iron ore miner behind Brazil's Vale did not provide guidance on its 2014 production, but is expected to reach an iron ore target of 290 million tons a year by mid-2014 as it seeks to feed Chinese steel furnaces with high-grade material.
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Rio Tinto Iron Ore Parker Point loading facility reclaimer is seen as part of the mining activities of British-Australian mining and resources company Rio Tinto Iron Ore, at Dampier in Western Australia.Aaron Bunch | Getty Images News | Getty Images
"We have set new records for iron ore production and shipments as we ramp up our 290 expansion, as well as achieving an impressive recovery in copper volumes and record annual production for both bauxite and thermal coal," Chief Executive Sam Walsh said in the company's fourth-quarter report.
Rio said production of iron ore, which makes up about 90 percent of its earnings following a surge in both demand and prices, reached 266 million tons in 2013, slightly ahead of guidance and up 5 percent on a year earlier.
A recent decline in steel prices in China has prompted some mills to reduce production not lift it, cutting China's average daily crude steel output to 1.961 million tons in late December, the first time it has fallen below 2 million tons since last February.
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Analysts have questioned the need to flood the market with more iron ore but mostly acknowledge that with the lowest production costs of any miner, Rio Tinto could weather any downturn in good shape.
Rio Tinto does not disclose production costs as a matter of policy, although outside estimates have put average cash costs as low as $26 per tonne, compared with a current price of $129.60 , according to data compiler Steel Index.
