(IBTimes) - Rio Tinto officials have admitted that challenges
in the near-term could hamper the mining firm's full-growth
capability, chief of which is the increasing cost of producing
the company's prime commodities - iron ore and coal.
Despite the anticipated difficulties, Rio Tinto chief
executive Tom Albanese informed the company's investors on
Thursday that previously announced production expansion will
proceed as planned, specifically the goal of ramping up the
country's iron ore output.
From its present iron ore production capacity of 230 million
tonnes, Rio Tinto has rolled out measures that would soon push up
that output to 283 million tonnes.
"Everything is now in place for the expansion to 283 million
tonnes and potentially to 353 million tonnes," Mr Albanese was
quoted as saying by Business Day in referring to the company plan
that he would submit before the Rio Tinto board.
The expansion path must be taken now, he added, as "we must
ensure we are proactively tackling issues now that may impact
productivity in years to come."
Mr Albanese reiterated his earlier suggestions of impending
challenges that Rio Tinto and the resource industry as a whole
would face, which he stressed can be dealt with by acting early
before the specific problem arises such as the rising production
cost in Australia.
"Increasing costs are an industry-wide problem, particularly
in hotspots like here in Queensland, and I am determined to be on
the front foot in tackling this challenge," the company chief
In a separate speech, Rio Tinto chair Jan Du Plessis informed
the company's shareholders, gathered in Brisbane today for the
firm's annual meet, that difficulties were indeed lurking ahead
as global economies fight off lingering threats of recession,
especially in Europe where last week voters ousted governments
deemed gravitating towards austerity measures.
Amidst the uncertainties, however, Mr du Plessis has expressed
confidence for the general outlook of Rio Tinto, especially in
the production department, which he said would surge by a hundred
percent over the next 20 years.
"Over the longer term, we continue to believe the outlook
remains strong, with demand for many of the products we produce
expected to double over the next 20 years," the Rio Tinto chair
said, adding that the company's overall growth prospect has
experienced considerable uplifts in the past six months.
"I believe our strong balance sheet will serve to strongly
underpin our business in the face," Mr du Plessis was reported by
the Australian Associated Press (
) as saying.
He acknowledged, however, that China has become a concern
following the controlled cooling down measures on the world's
second biggest economy that were unleashed by Beijing this
As one of Rio Tinto's biggest customer, any slowdown occurring
in China will definitely leave an impact, the Rio Tinto chair
But Mr du Plessis is not worrying that much as he stressed
that "the rate of growth (in China) is still very favourable in
comparison to global economic growth."
He added that the general situation in the United States
appears to be gradually stabilising, a condition that inevitably
would spread over other economies around the world, which Mr du
Plessis said were all favourable to Rio Tinto and other
Much of the concern for now is focus on Europe, where he noted
"the European Central Bank has in recent months managed the
sovereign debt crisis in Europe well."
Mr du Plessis, however, conceded that the recent defeat of
French President Nicolas Sarkozy and other European leaders that
championed fiscal discipline was somewhat a jarring development
for the business community.
"Recent events have shown that the situation is clearly not
resolved and the potential for contagion continues to linger,"
the Rio Tinto chair warned.
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