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04. September 2007

Rio Tinto expects iron ore price to rise

Mining giant Rio Tinto indicated iron ore prices could rise in 2008, saying the world appeared to be calling for greater production.

Rio Tinto's Iron Ore chief executive Sam Walsh said the market was extremely tight, a situation that would normally signal a price rise when negotiations with steel mills begin next month.

"The interesting thing is when you look at steel mills and iron ore countries around the world, each of them are doing pretty well, we are seeing the mills far more profitable than they were," Mr Walsh told journalists in Perth.

Huge demand was coming from the burgeoning Chinese economy, India, the Middle East and Russia, he said.

"You are seeing a world that is calling for greater capacity of iron ore.

"If you want to signal that you want more capacity brought on, well, a price rise will signal that."

Most analysts are tipping iron ore prices will rise for 2008 - with some forecasting a jump of at least 25 per cent next year as demand outpaces global supply.

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