Economic growth around the world, in Asia and particularly in China, has resulted in strong demand for metals and minerals, said Anglo-Australian Rio Tinto Friday at an annual meeting of shareholders in Perth, Australia.
"These are buoyant times for the mining industry. We are struggling to meet demand that is fuelled by large developing economies going through a metals intensive phase of their development," said the company's Chief Executive Leigh Clifford. He added that stocks of most products remained low so prices in 2007 were expected to continue at levels "significantly above the long term trend."
Rio Tinto expects China's strong growing demand for metals to continue and added that there is a strong momentum in most Asian economies which represents big markets for the company.
Rio Tinto's Chairman Paul Skinner said: "On the supply side, a number of constraints, ranging from shortages of key consumables to the tight supply of skilled professionals and tradesmen will continue to limit the growth of new production capacity."
The company's approach will be to continue to invest in value creating production growth to provide long term supply assurances to customers, and to maintain market position.
"Our existing portfolio, especially the early stage copper projects we acquired in 2006, has the potential to generate continuing growth in future. Meanwhile, we remain alert to further opportunities for mergers, acquisitions and alliances, Skinner said.
In 2006, Rio Tinto acquired interests in three large, long term copper projects: La Granja in Peru, Oyu Tolgoi in Mongolia, and Pebble in Alaska. Adding the Resolution project in Arizona to the list, Rio Tinto will have a stake in four of the 10 largest undeveloped copper deposits in the world, the company said.
The company, however, highlighted that iron ore expansions in Western Australia remained as the company's biggest current capital investment. "The challenge of operating and expanding 10 mines, three ports and a 1,600 km rail network in the Pilbara (in Western Australia" at a time of maximum production should not be underestimated. Our teams in the Pilbara are doing an excellent job, notwithstanding the challenging cost environment and the occasional cyclone," said Clifford.
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