Rio Tinto says long-term commodities outlook unchanged
PERTH (Reuters) - The positive long-term outlook for global commodity prices is unchanged, global miner Rio Tinto's (RIO.L) (RIO.AX) chief executive said on Thursday, shortly after Australia's resources minister called the peak of the country's resources boom.
A slowdown in Chinese demand for the commodities that have driven the boom, particularly coal and iron ore, has pressured prices and forced miners across Australia to cut costs by delaying projects and laying off workers.
"The long term picture for me hasn't changed," Tom Albanese told a resources industry gathering in Perth, adding, "I would have never have said there was a boom in the first place."
Rio stuck to $16 billion in spending plans when it reported earnings this month, despite first-half profit falling by a third, and predicted a modest pickup in the Chinese economy later this year that should stimulate demand for iron ore.
"We definitely see a soft demand period in China as it's still in the throes of a soft building cycle," Albanese said.
"So it's not a normal business cycle. Highs are higher, lows are lower, it's pretty scary, but we've got to be in a position where we're resilient in that circumstance," he said, calling for a cautious investment approach.
"We are going to have to make more tough decisions, invest in fewer projects, we are going to have to defer other things, we are going to have to stage projects."
Resources Minister Martin Ferguson's remarks followed a decision by Rio's rival, BHP Billiton (BHP.AX), to indefinitely delay the planned $20 billion-plus Olympic Dam copper expansion in South Australia and plans to build a new harbour, estimated at more than $20 billion, in Western Australia.
Iron ore prices are languishing at two-and-a-half year lows and were likely to continue testing support for much of the third quarter until Chinese stimulus measures kicked in, Albanese said.
Rio shares last traded up 0.2 percent at A$54.21, having fallen 13 percent so far this year.
(Reporting by Rebekah Kebede; Editing by Lincoln Feast and Clarence Fernandez)
- Tweet this
- Share this
- Digg this