Iron ore is down by more than 30% year to date on expectations of a glut on markets just as demand from China, responsible for two-thirds of the 1.2 billion tonne seaborne trade, cools and stockpiles of imported iron ore at Chinese ports are at record highs above 110 million tonnes

Mr Sam Walsh CEO of Rio Tinto said that “The flood of new supply poses less of a threat to the London headquartered miner than its peers. We are the lowest cost producer in the world with costs of USD 20 per ton compared to the price around USD 92 per tonne, I think we’ll be OK. I don’t think we’re going to go down to USD 80 or else a lot of my friendly competitors are going to disappear.”

Mr Walsh said that “I think that USD 80 is too low, I suspect a level somewhere north of USD 100 is probably more realistic. We are confident with our projections that as we go forward the expansions that we’re making will be justified, they will be required by the world.”

Goldman Sachs has recently predicted that global supplies of iron ore are set to exceed demand by 175 million tonnes next year as top producers Vale, Rio Tinto and BHP Billiton continue to increase capacity.