Rio Tinto sanguine on China's ironclad demand

Rio Tinto, the world's largest iron ore miner, said it anticipates more growth, investment and local partnership opportunities in China, as signs have been indicating that the Chinese economy has been gradually recovering, a top company official said.

China accounted for more than half of Rio Tinto's global revenue in 2022, with China having positioned itself as an industrial hub in the world, said Jakob Stausholm, CEO of Rio Tinto, during the China Development Forum held in Beijing in March.

"Based on the current robust cooperation with China, Rio Tinto is confident in the new GDP growth target set for China and we believe China is expected to make a significant contribution to global economic growth this year once again," Stausholm said.

"All the indicators we see, not just macro, but also in our businesses, suggest that the Chinese economy has been recovering and I feel confident about the targets set by the Chinese government."

He said Rio Tinto will further deepen its partnerships with local players, as "partnering up with Chinese companies is helping Rio Tinto create stability".

The Western Range iron ore mine project in Pilbara, Australia, jointly developed by Rio Tinto and State-owned China Baowu Steel Group, kicked off construction last month. Production of the project, with a total investment of $2 billion and annual production capacity of 25 million metric tons, is anticipated in 2025. Rio Tinto holds a 54 percent stake and Baowu has 46 percent.

The two sides have also forged an agreement to sell up to 126.5 million tons of iron ore at market prices over 13 years.

"China wants to strengthen its domestic production and security of supply, including international expansion, and that's actually what we are doing hand in hand with the Chinese partner," Stausholm added.

An analyst said while China is the world's largest producer and consumer of metals, it still relies on imported raw materials such as iron ore, bauxite and copper concentrate that are further processed into steel, aluminum and refined copper for downstream users in real estate, auto, shipbuilding and consumer electronics.

"Therefore, Chinese producers invest overseas for mining assets, in an effort to secure raw material supplies at a competitive cost," said Zhu Yi, a senior analyst with metals and mining at Bloomberg Intelligence, a market monitor.

"For instance, the Simandou iron ore project (in Guinea), which involves Chinese companies and Rio Tinto, produces 65.5 percent grade iron ore, and has relatively low alumina and silica impurity levels, helping boost the steel industry's efforts to reduce carbon emissions," Zhu said.

Simandou, Stausholm said, is part of the company's efforts to further get involved in China's high-quality development, helping secure China's supply chain security.