Anglo-Australian mining giant Rio Tinto said yesterday its outlook was positive despite the world financial crisis, even as the economy of major market China “paused for breath.”
In an operations review, the world’s third-largest miner posted record production in iron ore for the quarter ending Sept. 30 and said it performed well in bauxite, hard coking coal and US coal production.
But the company, subject to a hostile takeover offer from rival BHP Billiton, also said the global financial crisis had forced it to review the timing of its planned US$15 billion divestment program.
POSITIVE OUTLOOK
“The long term outlook for Rio Tinto remains positive despite the upheavals in global markets,” chief executive Tom Albanese said. “With our cost competitive assets, resilient margins and strong customer base, Rio Tinto is well placed to weather the current economic weakness.”
The group said while growth in China was expected to fall from close to 12 percent last year to less than 10 percent this year, the slowdown was largely the product of tight credit policies in China.
“In the near term, the Chinese economy is pausing for breath,” Albanese said. “China is not completely insulated from an OECD recession and we will see an impact on Chinese exports. However, the near term slowdown of growth is substantially due to tightening of monetary policy introduced by the Chinese government last year in order to tackle inflation. Furthermore, we expect third quarter economic data to show an exaggerated slowdown, reflecting the postponement of projects during the Olympics.”
DEMAND FALLS
Rio said Chinese commodity demand growth had fallen markedly from the overheated levels seen last year but that, over time, it would accelerate. However, any bounce in net demand would not occur until next year.
Albanese said in the longer term, China’s growth would remain largely driven by the domestic economy and the firm expected industrialization and urbanization to continue and strengthen demand across a range of Rio products.
Rio reported record quarterly global production of iron ore, which was up 17 percent on the third quarter of last year and noted record production for the US coal business, up 13 percent on the third quarter of last year.
Australian hard coking and thermal coal output rose 40 percent and 8 percent respectively for the quarter over the previous corresponding period, it said.
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