Australian miner Rio Tinto CEO Sam Walsh has talked to Bloomberg TV about the price volatility in the iron ore market, expressing confidence that Rio Tinto will be able to survive the decline in iron ore prices since it is the world's lowest-cost iron ore producer at $20/mt, compared to the current iron ore price at $92/mt. "I think we'll be ok", said the Rio Tinto CEO.
Mr. Walsh does not expect iron ore prices to go down to $80/mt as Goldman Sachs predicts for the next year, adding that, if this happens, "a lot of my friendly competitors are going to disappear". He recalled that in a year and a half ago when a number of people exited the market and when China, Africa and partially Australia lost domestic supply, due to iron ore prices going down to $80/mt. "A level of somewhere north of $100 is more realistic," he said.
Despite too much supply and demand not ramping up as it is used to, the Rio Tinto CEO indicated that they are confident the expansions they are making "will be justified, they will be required by the world".
Regarding the Simandou iron ore project in Guinea, the largest mining project in Africa, the investment framework for which was signed recently, the Rio Tinto CEO said that the $20 billion project will come online in December 2018.