Rio Tinto & BHP Billiton: The Battle of the Mining Titans

Rio Tinto and BHP Billiton have been in the news lately following both companies’ large increases in production.Not all of the feedback has been positive, with Western Australia’s Premier Colin Barnett accusing the mining giants of working in tandem to increase their production with the aim of pushing out smaller miners who have much larger production costs.

Following this accusation, the chairman of the Australian Competition and Consumer Commission, Rod Simms has said the two mining giants were not abusing their market power . . . simply pursuing market share with strategies that they had started in 2010 and worked towards for the past 3 to 4 years.

Rio and BHP increased their infrastructure investments over that time and the present production figures would be a direct result of that, he said

At present, Rio is producing larger volumes of ore than BHP and also keeping production costs down to about $20 a tonne. BHP has added costs of $10 more per tonne, but hopes to close that gap by half — to just $25 in the next two years.

Both miners aim to increase their iron ore outputs next year. Rio by 25% to 360 million tonnes and BHP from 225 to 290 million tonnes by 2017.

To go beyond 270 million tonnes, BHP will need to either tap options for two additional berths in the inner harbour in Port Hedland in a $US600 million to $US800 million development, or resurrect a $20 billion outer harbour project, either way job opportunities must increase in the Port Hedland area.

The competition between these two mega miners is continuing to push iron ore mining along at a steady rate and means jobs will be available in both companies for years to come.(Source: IMINCO