Rio Tinto Remains Upbeat Amidst Softening Commodities Market

The international market for commodity products could be softening thanks to financial crises in Europe and the United States.

According to global miner Rio Tinto, as prospects dim for most of the major markets, credit becomes increasingly difficult for buyers to secure.

"For the near term I am concerned about the general softening of prices when we continue to see cost escalation and strong currencies in Australia and Canada," Rio Tinto chief executive Tom Albanese told Reuters Monday.

Further compounding the pressures now seen in Australia and Canada, Albanese said, are the financial turmoil in America and the European Union, which he noted have been deteriorating and inevitably affecting market sentiments.

Rio Tinto, however, remains upbeat that its produce of copper, coal and aluminium from its mining sites across the globe will move despite prevailing conditions.

"While there are signs of nervousness, we believe the impact of current economic concerns on our business is manageable, unless financial markets substantially deteriorate," Albanese stressed.

To prove that Rio Tinto has maintained its optimism, Albanese said the company has lined up $14 billion worth of projects for next year and more investments are likely.

Rio Tinto hopes to ramp up its iron ore production, with Albanese projecting that the company's current output of 240 million tonnes each year will be raised to 353 million tonnes by 2015.

Such goals, the Rio Tinto chief, are in line with steady market prices for products it produce, which have delivered significant revenues so far except for aluminium.

Aluminium prices, Albanese said, have been plunging, with the current levels now reaching the point described by the Rio Tinto boss as "well below the industry's marginal cost of production."

To offset further loses and as dictated by the present market condition, Rio Tinto has lined up the shutting down of smelters in the United Kingdom, Australia and New Zealand, with plants located in Europe and U.S. under review for possible winding down of their operations.

As expected, Rio Tinto is drawing dramatic prospects from its iron ore operations, a segment of its business that according to Albanese will reach production capacity of 100 million tonnes each year over the next decade, enabling the miner to capture a significant pie of the global iron ore market.

"Rio Tinto expects to supply around 25 percent of this industry growth," Albanese told Reuters.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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