Rio Tinto will sell up to 15 million tonnes of iron ore on the lucrative spot market next year, which is likely to generate an additional $1.74 billion in revenue, the miner revealed today.
Rio, which is being stalked by fellow mining heavy weight BHP Billiton, said spot market iron ore prices were about US$100 a tonne higher than the ore it sold under long-term contracts during 2007.
It said selling 15 million tonnes on the spot market would generate an extra US$1.5 billion in revenue before tax.
The move is likely to place further emphasis on the strength of Rio's business, and the iron ore market, as it defends itself from BHP's advances.
Rio Tinto Iron Ore chief executive Sam Walsh said the bulk of Rio Tinto's capacity in the Pilbara was committed to long term contracts, which would continue to be honoured.
"At the same time the gap between the benchmark and spot prices is huge and we intend to continue to take advantage of those higher prices," Mr Walsh said.
Rio said it had sold one million tonnes of iron ore at US$190 per tonne this month and a similar volume had been sold for a January shipment, which attracted an average price of US$187 million.
Rio wants to increase iron ore production to more than 600 million tonnes per year, which would include producing 420 million tonnes from the Pilbara.
