Rio Tinto sees India, SE Asia to drive steel growth
05 Nov 2015
Global mining giant Rio Tinto Plc is looking to emerging markets in India and South East Asia for long-term demand for iron ore, the company's iron ore head Andrew Harding said this morning.
While speaking at a business breakfast in Perth, Harding said the company will maintain output despite weak prices.
''The reality is this is a long-term game and what you're trying to do in the long term is match supply to demand," he said.
Iron ore demand is expected grow at around 2 per cent annually to 3 billion tonnes a year by 2030 and non-Chinese market will drive up the demand for iron ore.
''We are expecting non-Chinese demand for steel to increase by 65 per cent in the period to 2030, with ASEAN economies and India playing key roles,'' he said.
Chinese steel production is expected to grow 1 per cent a year off a high base.
''This is good news for low-cost iron ore producers and it will be great news for Australia,'' Harding said.
Criticizing allegations from higher cost iron ore producers such as Fortescue Metals Group over increased outputs, Harding said, ''We are vigorously competing against global suppliers for market share. If we stop doing that the Pilbara producers will lose and Australia will lose. It's that simple.''
"If you think for one second that you can just take some volume out and no one else will move to fill that volume, then you're fooling yourself," he said.
The mining giant recently maintained its shipping target of around 340 million tonnes of iron ore in 2015, up 12 per cent from 303 million in 2014. In the third quarter, the company recorded a 17-per cent jump in exports compared to the same quarter last year.
Spot price of the main steel-making ingredient is near 10-year low of around $48 a tonne. The prices have nose-dived from their record highs of around $190 a tonne in February 2011.
In addition to a slowdown in China, the supply glut in the market is the major factor behind the slump in prices. The big three iron ore producers, Vale, Rio and BHP have been raising output for fear of losing market share.
