SYDNEY （MarketWatch） -- Rio Tinto （RIO, RIO.LN）, the world's second-biggest miner of iron ore, expects the price of the commodity to ease in two to five years as new supply comes to market, CEO Tom Albanese said in a TV interview Sunday.
"It's hard to find big new areas of supply globally, particularly in 2011, but in 2013, 2014 or 2015, you will see a lot of new iron ore coming into the market and it's probably going to put the market closer in balance than it is today," Albanese told ABC's "Inside Business" program. The iron ore markets, "when they come into equilibrium, will lead to some softness in those markets longer term. I think anyone that invests on the basis of today's prices is likely to be disappointed down the road. The question really will be over the next five to 10 years will be what will be the global steel demand and how will that translate to iron ore production, but I think realistically we can expect a reversion from current levels."
Rio Tinto last week said its 2010 profit nearly tripled to a record US$14.3 billion, largely due to record prices for iron ore and copper during booming demand from China.
Expanding its Pilbara iron ore operations in Western Australia state by over 50% over the next five years would be Rio's top growth priority, Albanese said.
On copper, he said the longer that prices for the metal remained high, the greater the supply response would be.
"I think we will see a continued period of strong copper pricing, largely because many of the large mines, including our own, are seeing declining grades [and] deepening pits, but you will see new mines like our own in Oyu Tolgoi in Mongolia…so we will see new copper supply coming in and that will begin balancing out with demand."
In regard to potash, Albanese said he would rather look at exploration and small M&A opportunities that could be bolted onto the existing businesses of Rio Tinto
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