Recent declines in the price of iron ore have not disrupted contractual commitments with customers, a senior Rio Tinto official said Tuesday.
"We haven't seen any impact in shipping commitments," said Andrew Harding, Rio Tinto's chief executive for iron ore, in response to an audience query at an industry conference in Perth, Australia.
Harding attributed sharp drops in spot prices to a "credit squeeze" and high stockpile levels in China.
"Sentiment caused rapid changes," he said. "We expect volatility on a regular basis [but] the longer term is still intact."
The Platts 62%-Fe Iron Ore Index fell by $7/dry mt to $105/dmt CFR North China Monday, the lowest in one-and-a-half years.
China's drive to step up environmental regulations will also buoy demand for lump ore and pellet, putting pressure on low-grade ore, Harding said.
"There's clearly interest in any product that helps them from an environmental point of view," he said.
"In our model, we're assuming that China's taking the environmental concerns very, very seriously," Harding said, adding that while changes will take place in a gradual manner rather than in a "light switch" way, this would impact pellet and lump premiums.
Rio Tinto has allocated 85% of its iron ore sales to long-term contracts and the remaining 15% to spot contracts in 2014, Harding said.
