Rio Tinto warns of further volatility

14th Jul 2010 07:03

This year continues to "shape up well" for Rio Tinto, but the mining heavyweight today warned investors to expect further volatility in commodity prices on fears of a double-dip recession and concerns about Chinese demand.In a second quarter update, chief executive Tom Albanese said operations are close to capacity and markets for most products are strong and the overall long term demand outlook is positive. Global iron ore production was down 2% on the second quarter of 2009, although output in the first half was 15% higher than a year ago when markets were recovering from the global financial crisis.The Pilbara iron ore operations in Western Australia continued to run at close to nameplate capacity with production for the 12 months to 30 June topping 219 million tonnes.Separately, Rio said it will spend US$200m on dredging contracts to expand the Cape Lambert port, which will support an increase in overall capacity at Pilbara to 330 million tonnes a year. Meanwhile, mined copper and gold output dropped 19% in the quarter and 34% for the half-year mainly due to lower grades at Kennecott Utah Copper and Grasberg."Markets for most of our products are strong and the overall long term demand outlook is positive," Albanese said. "But in recent weeks, fears about a possible double-dip recession in OECD countries and a slight slowdown in Chinese growth have led to some weakening in sentiment. We believe this pattern of volatility in the global economy is set to continue." "Growth is firmly back on our agenda."