Mining
giant Rio Tinto says steel production in China has reached a saturation point
and growth in demand for iron ore, one of Australia’s largest revenue earners
and exports, will now come from India and other countries in Asia.
“Globally, I think China has reached a saturation point in
terms of its steel production,” Rio’s chief executive Jakob Stausholm said. “I
think we will see steel production in China going slightly down in the course
of this decade. It might be flat or it might be a little bit lower.”
China’s faltering economic recovery and
troubles in its property market are intensifying concerns about demand for iron
ore, steel-making’s raw material from which Australia’s major miners Rio, BHP
and Fortescue Metals Group earned record prices for cargoes in 2021.
China’s market would
remain stable and exports were still at historically high levels, Stausholm
told a Melbourne Mining Club forum on Tuesday, following comments last week
when he insisted that Rio, because
of its lower operating costs, was in a stronger position than others to
ride out any falls in commodity prices from weakening demand in China.
Growth will come from India or South Asia. “Over time it’s
bound to happen,” he said.
The mining boss, who travels regularly to China and visits
steel producers, said Chinese steelmakers were looking at developing mills in
Indonesia or the Middle East.
Under Stausholm’s stewardship, Rio is
firmly on a path to diversify its mineral base and dig up and produce
“future-facing” elements such as copper and nickel, which are increasingly
sought after to accelerate the clean energy transition.
Stausholm said he had avoided making big acquisitions to boost
the company’s portfolio, but was focused on smaller acquisitions or joint
ventures that would “actually shape the portfolio in a helpful way”.