Rio Tinto iron ore chief Sam Walsh says the miner is focused on securing regulatory approval for its $US19.5 billion Chinalco deal while a prominent analyst has tipped iron ore prices to fall 50 per cent.
Rio Tinto iron ore chief Sam Walsh says the miner is focused on securing regulatory approval for its $US19.5 billion Chinalco deal while a prominent analyst has tipped iron ore prices to fall 50 per cent.
Rio Tinto iron ore chief Sam Walsh says the miner is focused on securing regulatory approval for its $US19.5 billion Chinalco deal while a prominent analyst has tipped iron ore prices to fall 50 per cent.
Chief executive officer Sam Walsh, keynote speaker at today's Global Iron Ore and Steel Forecast Conference in Perth, said the Chinalco investment would help the company achieve its goal of shedding $US10 billion debt by the end of 2009.
"Our main focus at the moment is on the strategic alliance with Chinalco, getting that established and bedded down," Mr Walsh said.
"That is an integral part of the reweighting of Rio Tinto."
Earlier this year, Rio unveiled a $US19.5 billion deal with Chinalco, which will give the Chinese company a 15 per cent stake in Rio's Hamersely Iron assets in the Pilbara, and take interests in other major assets.
Mr Walsh said the deal would enable the company to pay off debt, define capital expenditure and curtail further job losses.
"After looking at a number of alternatives in relation to seeking the credit that we needed, the company came to the conclusion that Chinalco was the best deal for our shareholders," Mr Walsh said.
He added that future steel prices would not be determined by asset levels, and the company would continue to seek a mutually acceptable agreement for annual prices.
"Our existing joint ventures have not impacted on commercial discussions. At the moment price arrangements are a blend between long-term and spot prices, although given the nature of the climate we are selling significantly into the spot market at the moment," Mr Walsh said.
Meantime, Citigroup analyst Alan Heap has forecast a 50 per cent drop in contract iron ore prices over the next two years.
He told delegates at the conference that prices could drop 30 per cent this year and a further 20 per cent in 2010.
Negotiations for the annual benchmark contract prices are currently underway for the year starting April 1.