Rio Tinto eyes India as China growth slows

Rio Tinto is betting on India’s growth to balance a slowdown in China, its largest iron ore customer, as the mining company prepares for changes in global steel demand.

China’s demand won’t collapse, but it won’t grow either

At the Melbourne Mining Club, Rio Tinto iron ore chief Matthew Holcz rejected predictions of a sharp drop in Chinese iron ore consumption. While China’s steel industry is maturing and scrap steel use is increasing, he stated that claims of terminal decline are overstated.

The company expects Chinese iron ore demand to stay steady through 2030, followed by a gradual decrease. Meanwhile, the firm is betting that growth in emerging markets is expected to offset some of that pressure.

India’s appetite set to double by 2040

Rio Tinto’s long-term plan depends on emerging markets, especially India. Holcz said, “India is growing at around 5 per cent a year. We expect their consumption to double from now to 2040, and expect them to be a net importer by 2035.”

The company is also expanding its supply sources. Its Rhodes Ridge project in Western Australia’s Pilbara region, called the best undeveloped deposit there, is in pre-feasibility studies with a $US190 million ($269 million) investment. Studies are expected to run until 2029, when the company plans to make an investment decision. First ore is targeted for 2030, with Rhodes Ridge expected to provide the capacity to lift Rio Tinto’s Pilbara production towards 360 million tonnes a year.

The project will also help address one of the industry’s biggest challenges: declining ore grades.

Holcz recognized supply-side difficulties, including disruption risks and the challenge of launching new projects. He stated that the market’s supply side is becoming harder to manage due to resource depletion, falling grades, and the need for new developments.

The company’s copper expansion continues to advance. As the miner leans further into copper and debate continues over China’s iron ore demand, Rio Tinto is banking on two major developments — Rhodes Ridge in Western Australia and Simandou in Guinea — to underpin its iron ore business as the global market evolves.