Rio Tinto share price: Miner slams Fortescue’s ‘harebrained’ iron ore plan

on Mar 26, 2015
Updated: Oct 21, 2019

Rio Tinto’s (LON:RIO) chief executive Sam Walsh has dismissed as ‘harebrained’ a suggestion by smaller rival Fortescue Metals Group (ASX:FMG) that miners should cap iron ore output to boost prices. According to Rio’s CEO, there would be no benefit to Australia from trying to support the iron ore price by setting a cap on production, despite market oversupply and waning demand growth in China.

“To try and artifically prop it up with some harebrained scheme, that’s just physically not going to work,” Walsh told a mining conference yesterday, two days after Fortescue Metals Group’s chairman and founder, Andrew Forrest, called on fellow iron ore miners to shore up the plunging iron price by “acting like grown ups and just agreeing to cap their production”.
Forrest’s suggestion followed growing concerns over whether Rio and its peers at BHP Biliton (LON:BLT) and Brazil’s Vale (NYSE:VALE) — which together form the world’s top three iron ore producers — are pursuing the right strategy by trying to compete with China by flooding the iron ore market and grabbing scale on the cheap. Forrest said that he would be “happy to cap my production now” in order to get an agreement with Rio and its iron ore rivals.
Rio and BHP have previously argued that if they do not continue to increase production – which even at current prices attract a big margin – then their competitors will simply fill the gap, and higher prices will incentivise new projects into the market.
Rio Tinto’s share price has been volatile today. After a significant rise in early morning trading, the stock tumbled, trading 0.79 percent lower at 2,902.91p as of 09:36 GMT. Shares in the FTSE 100-listed miner are almost 12 percent down as compared to a year ago.
As of 10:24 GMT, Thursday, 26 March, Rio Tinto plc share price is 2,925.00p.

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