Mining giant Rio Tinto is looking beyond China for its future growth, saying it’s well placed to benefit from the industrialisation of South America, Africa and the Middle East.
“Beyond China none of us should forget there’s India, there’s the Asian nations, there’s the Middle East, the former Soviet Union, South America and Africa,” Chief executive Sam Walsh told a British Chamber of Commerce lunch in Perth on Friday.
“All of these in their time, at different rates, are going to go through the same urbanisation and industrialisation process and they’re going to need the types of commodities that we in the mining industry supply for that growth.”
But the company still expects China to remain a key driver of demand for iron ore, with Mr Walsh saying economic growth in the world’s second largest economy could be a touch stronger than the company’s previously forecast 7.5 per per cent.
“If you look at China, the growth is going to continue to be there – I’m very optimistic about that,” he said.
Steel mills in China would continue to increase production as the urbanisation process in China continued, Mr Walsh said.
He is confident that 80 million tonnes of excess capacity will be reduced, as smaller, inefficient and higher polluting mills are closed.
“They also happen to be the mills that we don’t supply to – we supply to the larger mills,” Mr Walsh said.
Mr Walsh also expects the Chinese to focus on a higher grade ore product to improve the environmental performance of mills.
Earlier this month Rio Tinto announced it will cut its capital spending almost in half and shelve projects as it tries to bring down costs and win back the confidence of its shareholders.
The company plans to cut its capital spending to $US8 billion by 2015, below the $14 million it spent this year and well below last year’s $17.6 billion peak.