BHP Billiton has announced that it is slowing iron ore output and shelving a USD500 million port expansion plan at the Port of Hedland inner harbour.
In its operational review for the nine months that ended on 31 March released last week, the miner said it would go back to its 290-million-tonne production target a year and abandon the port upgrade because of the depressed market conditions for iron ore.
“The potential of our installed infrastructure continues to exceed expectations,” the review said. “As a result we are deferring the Inner Harbour Debottlenecking project. While this will lead to a slower path to system capacity of 290 million tonne per annum, it will come at a lower capital cost.”
The move has been welcomed by its long-term iron ore partner in Australia, Japanese trading giant Mitsui and Australian treasurer Joe Hockey.
The Treasurer urged other miners on 27 April to follow the lead of BHP Billiton and slow production until prices recover.
Both major players BHP and Rio Tinto had been criticised by smaller competitors and government alike of flooding the market by ramping up production despite a slump in Chinese demand.
News of the slowdown fuelled an iron ore rally, bringing the price back over USD59/tonne from a 10 year low of USD46.70 only three weeks ago.