Jakob Speaks in Tokyo Rio Tinto CEO says China still promising mineral market as EVs boom
Mining giant sees 'quite resilient' economy, good iron and copper demand
The Chinese economy is "actually quite resilient" despite some challenges in the property sector, Rio Tinto Chief Executive Jakob Stausholm told Nikkei Asia.
SAYUMI TAKE, Nikkei staff writer
November 9, 2023 14:19 JST
TOKYO -- China remains a key market for Rio Tinto, the Anglo-Australian mining company, even as the nation's faltering economy and authoritarian regime concerns some Western governments and businesses, Chief Executive Jakob Stausholm told Nikkei Asia.
"There are some challenges in the property sector, but you have to bear in mind that the automotive sector is booming, particularly EV production and the export of EVs," said Stausholm, who had just come from China to speak at Nikkei's Global Management Dialogue in Tokyo on Wednesday.
"There is also quite a lot of infrastructure projects in China(implies moly) , so if you take the whole together, the economy is actually quite resilient," he said on the forum sidelines, noting that he was "not an expert in all parts of the Chinese economy."
As one indicator, the country's steel production has risen 4.4% in the past 12 months (once again, moly), he said. This has driven demand for iron ore, a key resource that Rio Tinto leads globally in production, to "very, very good" levels.
Copper demand has also been "really quite impressive," according to the Danish-born businessman. Rio Tinto's new copper mine in Mongolia, where the company sources some of its copper concentrates for China, is "ramping up right now" to meet customer needs.
Despite Beijing often bearing down on foreign companies in the country, Stausholm said business "has actually worked well" for Rio Tinto in China, where it is focused on sales rather than mining operations.
Recent talks with Chinese customers have also been promising. "I have barely seen any place where there's such a focus on decarbonization," he said. "Very often, the first thing CEOs and chairmen ask me is: 'How can you help me [in] decarbonizing my business?' That's very encouraging."
Rio Tinto has enjoyed a strong tailwind from energy transition. It is a key provider of the minerals needed for EV batteries, solar panels and other clean technologies that electrify and decarbonize societies.
"There's more than four times more copper in an EV than in a combustion engine car," he said.
But strong demand also poses a challenge to miners who must secure stable supplies amid uncertain commodity prices. In the case of lithium, used in batteries, Rio Tinto expects to start additional deliveries from a reserve in Argentina in 2024.
"It's very, very difficult to say what the profitability will be," said Stausholm, noting that prices have been going "up and down." Today's prices have sunk to a quarter of those seen a year ago.
******"But it doesn't really matter," he said. "What matters is the long term." ********