Rio Tinto iron ore boss Simon Trott is bullish about long-term demand for the commodity in Asia as he reveals the mining giant has had to put more of its cheaper ore to market this year.
In an investor briefing on Monday, Mr Trott said while China’s appetite for steel is nearing its “structural peak” he expects demand to be supplemented by other emerging economies in Asia as they rapidly urbanise.
“Everyone talks about the urbanisation we’ve seen in China over the last decade, but what is not talked about as much is that in the next 10 years globally we will see just as many people urbanise as in the last 10 years,” Mr Trott said.
“So, iron ore will remain a very large and attractive market.”
Rio Tinto’s head of market analysis Will Millsteed pointed to India as a key growth market underpinning a forecasted growth of the global steelmarket of approximately 24 per cent by 2050.
“We estimate that developing regions, led by India and ASEAN nations, will more than offset China’s decline and result in global steel demand increasing from 1.7 billion tonnes last year to 2.1 billion tonnes by 2050,” Mr Millsteed said.
The comments from Rio Tinto follows the World Bank last week slashing its forecast for Chinese economic growth for 2024 from 4.8 per cent to 4.4 per cent, as the country faces a major slowdown in its property market.
Conversely, the World Bank has India pegged as one of the fastest growing economies in the world during the 2024 financial year, with anticipated GDP growth of 6.3 per cent.
Rio Tinto also revealed on Monday its Pilbara iron ore shipments for the September 2023 quarter reached 83.9 million tonnes, an increase of 1mt on the same quarter last year, with the full-year 2023 shipment guidance remaining at the upper half of the 320mt to 335mt range.
The company attributed the result to the successful rollout of its Safe Production System, which aims to manage production bottlenecks and is set to deliver a 5mt productivity uplift for 2023.
However, that uptick in growth was largely driven by higher-than-forecast shipments of its lower-grade ‘SP10’ product.
The company’s 2023 shipment guidance includes 45mt to 50mt of its SP10 product, equating to 13 per cent to 15 per cent of the total forecast. The SP10 guidance was previously anticipated to be less than 10 per cent of the total forecast, which Rio attributed partly to “delayed access to some mine areas”.
The SP10 product is a lower-grade blend of iron ore that is typically sold at a sizeable discount to Rio’s higher-quality iron ore products.
Rio said SP10 levels were expected to remain elevated for the next few years as it worked through the next tranche of mine replacement projects.
This includes the Rhodes Ridge project, which Rio reaffirmed as being one of the world’s largest and highest quality undeveloped iron ore deposits, with an Order of Magnitude study underway and expected to be completed by the end of this year.
Rio is anticipating a marginal increase in its iron ore shipments for 2024, with guidance released on Monday projecting between 323mt to 338mt.