From the West Australian:
Rio Tinto has signalled that development of its driverless train system is back on track, moving responsibility for completing the AutoHaul project out of its technology division to iron ore boss Chris Salisbury.
Launched in 2012 with a $US518 million budget, AutoHaul was due to be operational by 2015. The shift to driverless trains was to deliver an extra 10 million to 20 million tonnes of exports for the iron ore major by next year by reducing downtime associated with shift changes
But in April Rio was forced to cut its 2017 export guidance and admit it was struggling to integrate the complex software systems into a package that would allow it to move to a completely autonomous system.
This was the excuse used by the firm to cut its output from an original target of 360mtpa to roughly 330mtpa today. It will be interesting to see if it will now ramp up production or find another excuse to manage volumes. It will probably depend upon the relative balance of the iron ore market. Managing volumes as a strategy works so long as there is a reasonable market balance and there’s not much prospect of your cut tonnages being replaced by someone else. But if market slack returns then RIO is more incentivised to drive more expensive tonne from the market by ramping up its volumes.
My outlook for next year is a swing in the iron ore balance of roughly 100mt towards surplus as China demand stalls, it destocks the great port pile accumulated this year and new supply comes on. RIO may well decide to add to it.
