Feb 15, 2013

Australia, Rio Tinto joined at the broken hip of iron ore

Rio Tinto is over-exposed to iron ore prices that have collapsed over the last 12 months -- just like the Australian economy. David Llewellyn-Smith of MacroBusiness wonders if there's any way out.

Australia’s second great diversified miner reported earnings late yesterday that nicely capture Australia’s new economy. Our second largest miner and the nation itself has become fantastically dependent upon the fate of a single commodity: iron ore. And there seems little the company can do about it.

Over the 2013 calendar year, Rio Tinto delivered $51 billion in revenue, down 15.8% on 2011. Profits collapsed from $6.8 billion to -$3 billion on the huge writedowns in the aluminium and coal divisions.

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3 thoughts on “Australia, Rio Tinto joined at the broken hip of iron ore

  1. GF50

    No, Doing very nicely thankyou, “privatise the profits, socialise the losses”

  2. Coaltopia

    Our economy may be more durable if Australia had’ve fostered a clean-steel industry in Western Australia using WA Iron Ore and Gas.

    But BHP botched their DRI plant (and got a $500m tax-deduction for failing) and while Rio’s HiSmelt process is “clean” on-paper, it uses low-quality coal and then they outsourced it to India anyway.

  3. K.D. Afford

    I agree with GF50, The book Too Much Luck by Paul Cleary spelt it all out, the golden goose has swept past us and only left us down!

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