PERTH (miningweekly.com) – Diversified miner Rio Tinto chairperson Jan du Plessis said on Thursday that while the global economy continued to experience volatility, the economic picture had improved.
He told shareholders at Rio Tinto’s annual general meeting in Brisbane, Australia, that he was more confident than six months ago, with signs of a recovery in the US.
While the Chinese economy was cooling, Du Plessis said that the growth rate was still “very favourable” compared to global economic growth.
“Overall, we are somewhat more confident than six months ago, in addition to which, I believe our strong balance sheet will serve to strongly underpin our business in the face of short-term volatility.”
Du Plessis reaffirmed Rio Tinto’s belief that the demand for several of its products would double over the next two decades.
“Emerging markets are industrialising, people are moving to cities and working to raise their standards of living. Your company is well placed to supply this increase in demand for metals and minerals to meet rising infrastructure and consumption needs,” he told shareholders.
Rio would spend some $16-billion in 2012 to support its growth strategies, with Du Plessis saying the board was regularly reviewing the growth opportunities, along with potential acquisitions and disposals, which would improve the overall quality of the business.
“We focus on where we can achieve the best value for our shareholders,” he added.
Rio Tinto is investing in expanding its iron-ore capacity, with its Pilbara production increasing by 5-million tons to 225-million tons last year, and to 230-million tons this year. The group will expand its iron-ore output to 283-million tons and potentially 353-million tons.
“Spotting the shoots of Chinese growth a decade ago and investing in iron-ore mines means we have been producing at record levels at times of record prices,” said CEO Tom Albanese.
During the last financial year, Rio chose to exit a number of businesses, which it deemed no longer in line with its strategy. The mining giant streamlined its aluminium portfolio with 13 assets targeted for further efficiencies and preparation for either divestment or closure. Six assets in Australia and New Zealand were also transferred into a new business unit, which would be managed by Rio prior to their eventual divestment.
The company also began a strategic review of its diamond business that included a range of options for potential divestment.
“The fundamentals of our diamond business are very sound, with demand growing strongly and lack of discoveries limiting supply, although the business has become less relevant in terms of scale, as other parts of Rio have grown much lager,” Du Plessis said.