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Iron ore industry are waiting for hard times

Rio Tinto experts do not expect anything good in relation to the cost of iron ore and the resulting consequences. According to Samuel Walsh, General Director of the corporation, in 2015 due to the global decline in the value of iron ore production capacity may be reduced by 165 mln. Tons. According to forecasts of the global market will lose 85 million. Tons of ore, has 80 million. Tons fall into the danger zone. Speaking of risk S. Walsh is referring too high production costs, which ultimately will be forced to leave the market power of the data.

In 2015, from January to March, global supply of iron ore decreased by 22 million. Tons. However, Rio Tinto is silent on the resumption of the construction project Silvergrass, which costs 1 billion. USD. The company's management assures that his plans do not include a glut iron ore market. Jan du Plessis, chairman of the corporation, says that Rio Tinto is not going to displace competing companies. But at the same time the corporation does not limit their own plans, which include building up production capacity to the level of 360 million. Tons.

The main objective of the corporation is to reduce costs, as Rio Tinto plans to remain producer of iron ore with the lowest cost. By concentrating on the task at hand, the Corporation believes that steel consumption in China in the medium term will reach 1 billion. Tons.

In late April, the leader of the mining BHP Billiton announced that it plans to reduce the rate of implementation of the program to expand iron ore production. This is the Inner Harbour project, the abolition of which would not allow to produce annually 290 million. Tons of raw materials by 2017. According to current expectations in 2015 production figures amount to 250 mln. Tons.

Wanting to become a producer of the cheapest raw materials, BHP Billiton, along with Valei RioTintopovysili to an unprecedented level of ore extraction. As a result, the cost of iron ore recently practically kept at a minimum 10 year. And if the slowdown in the expansion BHP Billiton is positive news, the achievement of low-cost production of the metal is clearly a negative point. The Corporation also abandon this trend does not plan to. Presumably, the lowest costs around 20 USD / ton, given that productivity growth continue to increase.

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