Although it is hard to get profit in the steel industy,but the price of the iron ore still ,keep USD 150/T
Sam walsh said ,there are 3 reasons for the high price of the iron ore,frist,the bad climate decreased iron ore production,second ,the steel plant decreased the inventory,and the third reason is that it is a large ouput at the beginning of the year.
Rio Tinto conducted a study of ore project which went into operation in 2008-2012,and the results show that there is only one-third has been put into production as scheduled.
"There are many reasons ,such as it is difficult to develop ,the approval process is very complex,the difficulty of financing in increasing and also the technical workers at a reduced number."Sam Walsh said.
Sam Walsh said the main reason of high price is the short supply ,the price of iron ore will down to "normal level" as the damand and supply balance .
Recently,VivekTulpule the chief economist of Rio Tinto in a research noted that ,iron ore prices will fall to below USD100/T in the next 18 months,that is the price is going to fall 50% compared with current prices.
There is a different forecast from another big mining giant VALE,iron ore prices will remain at 110 to 145 USD in this year.
The drop in iron ore prices have a small effect on RIO as which has the lowest cost of the 3 mining companies,but it will have directly influence to the others with a high cost ,this is why RIO bearish on the iron ore price ,one industry source said to the reporter.
It is worth noting that even if the iron ore perice falls , most of the western Australia and Brazil iron ore project still have large profit space.We will not stop the expansion work of the project in Caracas,even if iron ore prices fell below 110usd a ton,because "there is still profit space', Vale said .
In recent years,Rio has been in expanding production of the iron ore.Its total shipment reached a record 247 million tons(according to the 100% stake ) in last year and iron-ore operations contributed nearly 80% of the profits for the group.RIO also plan to incresae the output of iron ore in this year.