Rio Tinto says global demand, prices for base metals will remain high

China and India, not U.S., drive markets for copper and aluminum

By Tom Stundza -- Purchasing, 3/17/2008 7:02:00 AM

Global miner Rio Tinto is eyeing significant expansion of its iron ore and aluminum operations in 2008 as an independent company, the company says today in its annual report to shareholders. As reported by the Business Spectator newspaper in Sydney, Rio Tinto sees growing demand in emerging economies for base metals and projects that demand for iron ore, aluminum and copper could triple over the next 25 years.

Rio Tinto’s chairman, Paul Skinner, used the opportunity of the release of its annual report to reiterate its rejection of the $147 billion offer from rival miner BHP Billiton, saying the offer still fails to recognize the underlying value of Rio Tinto’s high quality assets and prospects.

“We are seeing a dramatic change in the world’s centers of economic power, with rapid growth, urbanization and industrialization in many parts of the developing world,” Skinner says. “We expect a large part of the world’s population – billions of people – to move through increasingly metal intensive phases of economic development. This will transform our industry and underpin future growth in markets.”

Reuters News Service reports that CEO Tom Albanese tells shareholders he is confident that base metal prices could stay high for several decades on strong demand despite the major economic slowdown in the U.S. as the U.S. demand for metals has declined substantially relative to that of China since 2000. (Analysts have pointed out that while U.S. demand for aluminum declined in 2007, global consumption grew by more than 10%--with Chinese growth at 38%.)

See also: Deadline approaches for BHP buyout offer on Rio Tinto