Rio Tinto told analysts that capital spending to replace extracted iron ore will remain high for at least five years and beyond.
Simon Trott, the head of iron ore at the miner, said annual capital expenditure (capex) will be at least US$2bn to allow for replacement, new heritage rules and investment catching up.
Trott also warned that Rio expects cash costs (opex) to rise in 2022 due to higher shipping costs, longer hauling distances and general inflation including staff pay.
The miner added that it expects demand from China to recover but would prioritise value over volume if prices did fall further.
Deutsche Bank kept its price target of 5,200p and ‘hold’ view after the update, while Barclays has a price target of 4,200p and a 'neutral' stance.
Rio shares fell 1% to 4,579p, making it the only mining giant in the red today.