Rio Tinto iron ore chief executive Sam Walsh said today China has shown signs of economic improvement that may lead to a rapid, "V-shaped" recovery.
Speaking at the Mineral Week conference in Canberra today, he said China and India would be the key engines for an economic recovery, and while signs as yet lacked clarity, there was hope for a swift recovery in China on the back of aggressive government stimulus spending.
In terms of iron ore, Rio Tinto will be able to quickly respond once markets improve, reversing output cuts and going ahead with a planned iron ore expansion from 220 million tonnes annually to 300 million tonnes.
“Our major projects are ticking over, and we can bring them back to full production quickly once markets improve,” Mr Walsh said.
“We are ready to approve (the expansion) at short notice once markets improve.
“We have a positive medium-term outlook for our markets.”
Noting record iron ore imports into China, Mr Walsh said that was due to the closure of Chinese domestic iron ore mines and low spot prices.
Turning to Rio’s proposed $US19.5 billion landmark deal with Chinalco, Mr Walsh said Australia’s resources industry had long been built on customer relationships such as those with Japan, resulting in many joint ventures that haven’t impaired resource development.
“This is a time to recognise that trade and investment into resources go together,” Mr Walsh said.
He said the miner would determine any changes to terms of the proposed deal after Rio Chairman Jan du Plessis has met with shareholders.
“Once we have heard shareholders’ views, we will determine action,” he told reporters.
“We are proceeding for now with the existing terms of the deal.Yes, the economic situation is improving and we need to take into account what shareholders want.
“And we need to (meet with shareholders) first before any revision of the deal.”
Mr Walsh confirmed that Mr du Plessis will meet with government representatives and with shareholders in Australia this week.
Source: The Australian
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