Rio Tinto upbeat on China despite more local iron ore use by Chinese steelmakers

The shift by Chinese steelmakers towards use of more local iron ore has not fazed mining major Rio Tinto, which hopes to cash in on expected renewed Chinese demand even as prices of the commodity rise.

With global prices of commodities still falling the mining giant has announced it would cut unnecessary costs to save $5 billion by the end of 2014.

In a bid to achieve that, Rio has come out with plans to expand its output in the Pilbara region to 360 MT a year by mid-2015 from its earlier projection of 353 MT.

For 2012, the company registered a record-high full year iron ore production of 253 million tonnes, up 4 per cent over its 2011 production, with the bulk of the output, or 239 MT, coming from the Pilbara region.

However, the low iron ore and coal prices caused second-half underlying profits of big miners to fall to $7.7 billion. According to  analysts' forecast, Rio would report a 2012 full-year profit to $9 billion, down from $15.5 billion in 2011, which net a second-half underlying profit of $3.8 billion.

According to Tom Albanese, Rio Tinto chief executive, the mining company's business continued to perform well despite the markets remaining volatile. In 2012, iron ore prices fell to $89 a tonne, but had since logged a recovery to $158.50 in 2013.