Rio Tinto cuts iron ore output as Chinese demand weakens

Rio Tinto will cut output at its mines in Western Australia by 10% in response to reduced demand for iron ore from China’s steelmakers, Bloomberg reported. This follows a similar move by rival mining group Vale. BHP Billiton has so far declined to cut production or curb its expansion plans, but analysts believe the slowdown in demand makes such action inevitable. Announcing the cuts, Rio Tinto CEO Tom Albanese – who last week observed that China’s economic slowdown was worsening – said he expected a short, sharp slowdown, with demand rebounding in 2009. He noted that the fundamentals of economic growth in China remain sound. Rio’s Western Australia mines produced 145 million tons of ore last year, and last month the company said it expected output to reach at least 190 million tons in 2008. Output in the first nine months of the year came to 139.2 million tons.