23/07/14 – Rio Tinto confident on demand from China
Rio Tinto says Chinese demand for iron ore remains strong despite a short term oversupply and indications that India will resume iron ore exports.
Chief executive Sam Walsh said Rio was having to play a balancing act as it and other Pilbara iron ore producers brought on more supply.
“Demand is quite strong. We’re easily selling everything that we’re producing,” Mr Walsh said at a business function.
A short term oversupply of iron ore was still weighing on prices, he said.
India may restart iron ore exports, but freeing up that nation’s economy would also free up the steel industry and provide growth for Indian iron ore producers, Mr Walsh said.
He remains confident about the long term future of Rio’s business.
“As the world urbanises, and as Rio Tinto is the lowest cost producer in the world, proximate to the major growth markets, we’re incredibly well positioned,” Mr Walsh said.
China’s economy was achieving its expected growth rates, and around 85 million tonnes of iron ore produced in China had been displaced since the start of the year amid lower prices, he said.
Major pollution problems in China had also boosted demand for higher grade iron ore, Mr Walsh said.
Despite the upbeat outlook, he ruled out any acquisitions in the near future.
“Would Rio be involved in a major acquisition? I doubt it,” he said.
Rio plans to spend $11 billion in 2014/15 and it plans to review its $8 billion to $10 billion spending target for 2015/16 in February next year.
Source – DailyTelegraph.com.au