Rio Tinto Chief Executive Tom Albanese said turbulence in world financial markets wasn’t slowing economic growth in rapidly developing countries such as China.
“Accordingly, we do remain focused on maximizing value for our Rio Tinto shareholders, and we don’t need BHP Billiton to do that,” Albanese said in a business luncheon speech in Montreal.
Speaking to reporters afterward, Albanese said Rio Tinto’s goal to remain a stand-alone company stems from the value of its existing base of assets and that of its pipeline of projects aimed at adding capacity in various sectors.
“That’s why we’re happy to continue to respond to BHP Billiton with a rejection based on value,” he said.
BHP, the world’s largest mining company, wants to take over Rio Tinto in a 3.4-to-1 share swap.
Elaborating on his China theme, Albanese said internal demand, driven by industrialization and urbanization, was a key driver of the country’s economy, not just its exports to the United States.
He pointed to Brazilian miner Vale's VALE5.SA recent iron ore supply contract with Chinese companies at prices up to 71 percent higher than last year as a sign that supply and demand continue to be driven by economic fundamentals, not stock markets.
Albanese said he didn’t think a U.S. recession would have a significant impact on China’s demand for steel, copper and aluminium.
“Our estimate is that, if there is a recession in the United States, the impact on Chinese GDP growth will be on the order of 1 percent or less,” he said.
Albanese said he expects China’s gross domestic product to grow 10 percent this year.
He declined to offer specifics on progress in Rio Tinto’s own talks with prospective customers such as steel mills on iron ore contracts.
“Our overall objective is to see a freight differential recognizing the advantageous freight position that Rio Tinto in Australia has to the Asian market as compared to the more distant Brazilian materials,” he said.
Albanese said Rio Tinto was accelerating by “a few years” a pre-feasibility study on the expansion of its Alma aluminium smelter in Quebec. The expansion would add about 170,000 tonnes of annual capacity to the 400,000-tonne smelter.
He said the rationale for the expansion stemmed from Rio Tinto’s stronger outlook for aluminium and its plans to broaden that business using its assets and technology.
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