Rio Tinto Discusses Metals & Minerals Sector's 'Unprecedented Growth' from Emerging Markets

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Researched by Industrial Info Resources (Sugar Land, Texas)--At Rio Tinto plc's (NYSE:RIO) (London, England) annual general meeting, held yesterday in London, executives had reason to be optimistic about the company's recent performance and future prospects.

"If 2009 was about stabilization, 2010 was about stating our broader vision of becoming global sector leaders and delivering outstanding results," said Rio Tinto CEO Tom Albanese. "We achieved exceptional operating performance with record underlying earnings of $14 billion and record cash flows of $23.5 billion, giving us a strong platform for creating sustainable, value-adding growth." The company's 2010 net earnings of $14.32 billion were up from net earnings of $4.87 billion in 2009 and $3.77 billion in 2008.

The company is on a path of major growth involving significant capital investment, as well as mergers and acquisitions. Late last week, the company acquired a majority stake in Australia's Riversdale Mining (ASX:RIV) (Sydney), which has significant coal interests in Mozambique. For additional information see January 12, 2011, article - Rio Tinto Bids to Take Over as Mozambique's Benga Projects Power Up and February 16, 2011, article - African Mining Looking Rosy After Deal Flow Triples in 2010.

Higher prices and sales helped raise the company's profits in it various segments. Net earnings for the company's Iron product segment were $10.1 billion, an increase of 147% from 2009. Rio Tinto's aluminum group Rio Tinto Alcan (Montreal, Quebec) had net earnings of $773 million in 2010, compared to a net loss of $560 million in 2009. Net earnings for the company's Copper product group were $2.53 billion, up 35% from 2009.

The company sees a continued upward trend in these markets, particularly because of increased demand from emerging economies. "As emerging markets like China and India continue to industrialize and urbanize, we expect a consequent increase in the level of demand for products that are made from our metals and minerals," said Albanese. "There is a growing population around the world who want to improve their standards of living. They want better housing, cars, infrastructure, washing machines, and mobile phones--and there are already 5 billion of those in the world. To put this in context, over the next 30 years it is projected that the world will consume as much copper as it has over the last 10,000 years. ... For too long, our industry underinvested in its future, it did not do enough exploration, it did not train enough people and it did not build enough capacity to satisfy this surge in demand."

With $13 billion earmarked for capital expenditure in 2011, Rio Tinto seems determined to end this trend of complacency. The company's acquisition of the majority stake in Riversdale puts Rio Tinto in control of the Benga above-ground coal mine and coal handling and preparation plant in Mozambique. Construction of the 5.3 million ton per year run-of-mine facility is expected to be complete late this year.

As part of our International and North American Metals Industry Databases, Industrial Info is tracking more than $57 billion of Rio Tinto projects across the world.

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