SYDNEY May 4 Global miner Rio Tinto
said on Thursday it is watching for signs of a revival
in domestic iron ore mining in China later this year to reduce
reliance on imports amid firmer ore prices.
Rio Tinto is a top exporter to China of the steel making raw
material, which accounts for the lion's share of profits for the
"The key source of uncertainty is around - when you move to
the end of the summer - are they (China) going to restart some
of their mines," said Rio Tinto Chief Executive Jean-Sebastien
Jacques, following his company's annual general meeting.
China's mines - largely less efficient than those in
Australia and Brazil due to lower iron ore content - began
cutting annual capacity from around 300 tonnes three years ago
in line with falling iron ore prices, bottoming out at 250
million tonnes at the end of 2016, Jacques said.
But higher prices have made a revival in domestic mining
more likely, allowing Chinese steelmakers to reduce raw material
import costs and generating profits again for the mines.
The spot benchmark .IO62-CNO=MB, which touched a 30-month
peak of $94.86 in February, has eased around 13 percent this
year, but iron ore still sells well above the sub-$40 a tonne
plumbed in late 2015.
A rise in domestic ore could give mills some leverage to
push for better deals on imports from Rio Tinto, Vale
and BHP Billiton , which dominate the seaborne
iron ore market.
"We've got around 200 people in China, in Shanghai and
Beijing, and that is a big chunk of their work - to find out
exactly what's happening in the marketplace," Jacques added.
The comments come as Australian miners maintain near-record
shipments of iron ore to China and inventories at Chinese ports
April shipping figures from Australia's Port Hedland, used
by BHP and Fortescue Metals Group, showed an 11 percent
rise in exports to China to nearly 35 million tonnes.
Meanwhile, stockpiles of imported iron ore at China's major
ports topped 130 million tonnes as of Friday, up 950,000 tonnes
from the previous week, and are not far off record levels.
(Reporting by James Regan; Editing by Richard Pullin)