Rio continues to expand iron ore business

24 May 2012, 5:10 pm   -   Source: AAP

Rio Tinto says its continuing to expand its robust iron ore business and continue producing into the long-term despite concerns about a slow down in China

Resources giant Rio Tinto is pressing ahead with a robust expansion of its iron ore business despite concerns about a slowdown in China.

By contrast, rival BHP Billiton last week backed away from a commitment to spend $80 billion on growth projects in response to recent commodity price falls and the uncertain outlook for Chinese demand.

The two opposing views also throw into focus the future of the $450 billion "pipeline" of resource project across the entire mining sector being touted by federal Resources Minister Martin Ferguson.

Rio Tinto chief executive of iron ore Sam Walsh said on Thursday that the global miner expected Chinese economic growth at around eight per cent, fuelled by continuing urbanisation and industrialisation.

"I know there are a lot of people who are passing doom on that, but we're just not physically seeing that on the ground," Mr Walsh said in a speech to the Asia Society in Sydney.

"We see the iron ore business as being a very robust business.

"We see that continuing in the short term and long term."

Rio Tinto had enough iron ore reserves to mine its blend for 30 years and had plans to expand annual capacity to 450 million tonnes by 2016, nearly double the current amount, he said.

Developing regions such as Indonesia, the Philippines, Thailand, Vietnam, the former Soviet Union, Middle East, Brazil were all urbanising.

"If you look at the short-term, our view is that the market is steady as it goes," Mr Walsh said.

"Right now we're continuing to ship flat out with very good production and we see that Australia is uniquely placed in relation to the product we offer but also the proximity to demand and that certainly puts us in the box seat.

"We have a number of projects to expand our operations.

"These are things that we're continuing to work on and I'd expect that they'd improve."

Rio Tinto is the world's second largest iron ore producer, behind Brazil's Vale.

Mr Walsh, who began his career with General Motors, said Rio had learnt from the motor vehicle industry.

"Our integrated planning and operations centre that we run today certainly had its basics in how the car industry runs its vehicles and their plants and how they deliver in real time."

He also rejected suggestions that the actions of miners were too quickly depleting the earth's resources.

"We don't look to the future and see a steel-starved world," he said.

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