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Rio Tinto CEO Says Iron Ore's 55% Rally About to Fizzle Out

  • Second-biggest miner expects volatile and softening prices

Iron ore’s rally from a record low isn’t sustainable as output is set to increase, according to Rio Tinto Group, the second-biggest exporter.

Prices may fall in the second half as the new supply offsets improving demand from China, Chief Executive Officer Sam Walsh said. “I’ve said all along that we expect the iron ore prices will be volatile. That’s what we’re seeing,” Walsh told reporters after the company’s annual shareholder meeting in London.

Iron ore has rallied 55 percent from a December low amid signs of a rebound in demand from China’s mills and as the nation’s policy makers signaled they’d support growth. The top miners, including Rio and BHP Billiton Ltd., saw profits plunge last year as iron ore plummeted under pressure from a glut. At Rio’s meeting, Chairman Jan du Plessis denied allegations, cited by a shareholder, that the company is colluding with BHP to force out high-cost producers.

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