That’s the “key source of uncertainty, and therefore potentially volatility, in terms of iron ore prices,” he said.

“It’s going to be interesting to see what will happen as we get into summer months — are they going to restart some of this capacity. Depending on this decision, it may have an impact on the iron ore prices,” he said.

“I would say that there is a risk of volatility.”

The only other major component for iron ore prices is capacity in places like Brazil and Australia, he said, but those factors are already reflected in the price.

Jacques also reflected Sunday on the strength of the Chinese economy, telling CNBC that “all the indicators are moving in the right direction.”

“We have a pretty good understanding of what the situation is in China, and today when I look at all the books, I’ve got no concerns whatsoever,” said.

As for Beijing’s approach to specific industries, Jacques said “there is no real doubt” that China will restructure its steel industry because of pollution issues. Still, he said, that doesn’t mean that officials will reduce the steel output.

“They will shut down the smaller, less-efficient, more-polluting blast furnaces, but at the same time they will refocus all their production on the newest, largest blast furnaces,” he said, reflecting that it could be “a great piece of news” for Rio Tinto as such a shift will require higher quality raw material.

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