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Monday 3 November 2008
Rio Chief Albanese Says Slowdown in China Is Gathering Pace
Rio Tinto Group Chief Executive Officer Tom Albanese said the economic slowdown in China, the world’s largest user of metals, is quickening and demand won’t rebound until 2009.
Rio Chief Albanese Says Slowdown in China Is Gathering Pace
By Brett Foley, Bloomberg 3 November 2008
Rio Tinto Group Chief Executive Officer Tom Albanese said the economic slowdown in China, the world’s largest user of metals, is quickening and demand won’t rebound until 2009.
“It is decelerating more in the fourth quarter than we saw in the third quarter,” Albanese said yesterday in an interview at the company’s ilmenite mine in Madagascar. “That is going to lead to a deferred pickup in cumulative demand for most of the things we produce during the course of 2009.”
Rio is among mining companies reviewing investment plans after commodity prices plunged amid signs of a global economic slowdown. The London-based company, fending off a $76.8 billion hostile bid from BHP Billiton Ltd., is planning to spend more than $9 billion on new mines and expansions next year.
“We want to tailor our expected delivery of those projects with when we see demand picking up,” Albanese said. “We’ll prioritize spending towards the most robust projects.”
Projects that are almost complete will start production while those at an “early stage” and without financial commitments “will have to be given some latitude on the timing,” he said.
Copper, which accounted for 22 percent of Rio’s sales in the first half, has fallen 44 percent in the past two months while aluminum has declined 24 percent.
Chinese Contraction
China accounted for 17 percent of Rio’s sales in the first half. It’s economy grew at the slowest pace in five years in the three months through September, the fifth straight quarter that the expansion has cooled. The country’s Purchasing Managers’ Index, published Nov. 1 by the China Federation of Logistics and Purchasing, showed a contraction in September.
Sliding aluminum prices have led to about 1.6 million metric tons of global smelting capacity being idled, and another 700,000 tons may follow, Albanese said. “Prices at these levels are having definitive supply effects,” he said.
Rio is reviewing the costs of its joint venture with Saudi Arabia’s state-owned mining company Ma’aden to build a $10.5 billion aluminum smelter complex.
“We have rapid capital and construction costs escalation,” Albanese said. “This is an opportunity to test those assumptions of escalation and see if we can start bringing down the cost of these new projects.”
Aluminum Cuts
Rio, the world’s second-largest producer of aluminum and iron-ore, rejected Melbourne-based BHP’s sweetened, all-share offer on Feb. 6, saying it undervalued the company and its growth prospects. The offer is awaiting approval from European Union regulators, who last month told lawyers for BHP that the Australian company’s bid may break antitrust rules, two people close to the case said.
Rio said Oct. 15 it was reviewing its spending timetable and project costs. The company has already idled sections of its highest-cost aluminum plants. Rio’s development plans include the $3 billion Oyu Tolgoi copper and gold mine in Mongolia, the $6 billion Simandou iron ore mine in Guinea and a $1.5 billion nickel project in Sulawesi, Indonesia.
The ilmenite produced at Rio’s $1 billion QIT Madagascar Minerals mine in the island’s Fort-Dauphin region is used to make paint and toothpaste. The company said in February it may double output at the project from a planned 750,000 tons a year.
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Rio Chief Albanese Says Slowdown in China Is Gathering Pace
By Brett Foley, Bloomberg
3 November 2008
Rio Tinto Group Chief Executive Officer Tom Albanese said the economic slowdown in China, the world’s largest user of metals, is quickening and demand won’t rebound until 2009.
“It is decelerating more in the fourth quarter than we saw in the third quarter,” Albanese said yesterday in an interview at the company’s ilmenite mine in Madagascar. “That is going to lead to a deferred pickup in cumulative demand for most of the things we produce during the course of 2009.”
Rio is among mining companies reviewing investment plans after commodity prices plunged amid signs of a global economic slowdown. The London-based company, fending off a $76.8 billion hostile bid from BHP Billiton Ltd., is planning to spend more than $9 billion on new mines and expansions next year.
“We want to tailor our expected delivery of those projects with when we see demand picking up,” Albanese said. “We’ll prioritize spending towards the most robust projects.”
Projects that are almost complete will start production while those at an “early stage” and without financial commitments “will have to be given some latitude on the timing,” he said.
Copper, which accounted for 22 percent of Rio’s sales in the first half, has fallen 44 percent in the past two months while aluminum has declined 24 percent.
Chinese Contraction
China accounted for 17 percent of Rio’s sales in the first half. It’s economy grew at the slowest pace in five years in the three months through September, the fifth straight quarter that the expansion has cooled. The country’s Purchasing Managers’ Index, published Nov. 1 by the China Federation of Logistics and Purchasing, showed a contraction in September.
Sliding aluminum prices have led to about 1.6 million metric tons of global smelting capacity being idled, and another 700,000 tons may follow, Albanese said. “Prices at these levels are having definitive supply effects,” he said.
Rio is reviewing the costs of its joint venture with Saudi Arabia’s state-owned mining company Ma’aden to build a $10.5 billion aluminum smelter complex.
“We have rapid capital and construction costs escalation,” Albanese said. “This is an opportunity to test those assumptions of escalation and see if we can start bringing down the cost of these new projects.”
Aluminum Cuts
Rio, the world’s second-largest producer of aluminum and iron-ore, rejected Melbourne-based BHP’s sweetened, all-share offer on Feb. 6, saying it undervalued the company and its growth prospects. The offer is awaiting approval from European Union regulators, who last month told lawyers for BHP that the Australian company’s bid may break antitrust rules, two people close to the case said.
Rio said Oct. 15 it was reviewing its spending timetable and project costs. The company has already idled sections of its highest-cost aluminum plants. Rio’s development plans include the $3 billion Oyu Tolgoi copper and gold mine in Mongolia, the $6 billion Simandou iron ore mine in Guinea and a $1.5 billion nickel project in Sulawesi, Indonesia.
The ilmenite produced at Rio’s $1 billion QIT Madagascar Minerals mine in the island’s Fort-Dauphin region is used to make paint and toothpaste. The company said in February it may double output at the project from a planned 750,000 tons a year.
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