Rio Tinto Group expects a decline next year in the price of iron ore, the source of most of its earnings, saying global supplies will increase. Mr Sam Walsh CEO said that “There will be capacity coming on next year. I expect that iron-ore prices will soften a bit next year but it will still be a good business to be in.”

Rio is the biggest exporter of the steelmaking ingredient after Brazil’s Vale SA, generating USD 24 billion in sales of the raw material last year primarily at its Australian operations. Banks from Goldman Sachs Group Inc to UBS AG expect supply expansions led by Australian producers to push the seaborne market into surplus next year.

Goldman analysts wrote in a December 12 report that “We remain structurally bearish on the outlook for iron ore and see 2014 as the year when the iron-ore price starts to decline.” They said that trend will continue as supply is added.

The price of iron ore has gained 22% since sinking to a 2013 low of USD 110.40 a metric tonne in May. The strength of the price as well as increased imports into China, which reached a record last month, have been surprising, Walsh said yesterday. China is the world’s biggest buyer, representing about 60 percent of global demand, according to Goldman.