Mining giant Rio Tinto revised its production forecast for iron ore over the next five years amid lower volume of orders for the key steel making ingredient from China.

One possible implication of this policy is that Rio may possibly not open new mines ir expand after current projects are finished even if demand for iron ore remains healthy or steady.

Mr David Joyce chief of Rio Iron Ore Development said that “With this development, the lower end of the projected annual exports for iron ore could go down to 300 million tonnes in 2018 from the previous forecast of 360 million in May provided by Mr Sam Walsh CEO of Rio Tinto.”

However, the upper end remains at 375 million tonnes. Despite the adjusted forecast for the lower end of annual production for iron ore, Rio had approved the expansion of its Pilbara iron ore railways and ports on the assumption of handling 360 million tonnes annually, but its approved mine expansion is up to 290 million tonnes only.

Rio estimated that the revenue cost of not pursuing extra mine expansions would be AUD 7 billion a year based on 30% lower iron ore price of AUD 100 per tonne. The lower forecast were due to the projected lower commodity prices and Rio changing its focus from growth to cost cutting and capital management.

Mr Andrew Harding CEO of Rio Iron Ore said that “The giant miner would continue to pursue further productivity improvements from its fully integrated Pilbara system to maximize return on investment.”