Rio Tinto CEO sees little change in China ore demand

Tue Oct 11, 2011

* Albanese says sees continued robust business conditions in China
* Says does not comment on media speculation on China bid on Kalahari
* Says comfortable with quarterly pricing with Korean steelmakers

SEOUL, Oct 11 (Reuters) - Rio Tinto's chief executive said on Tuesday he did not foresee a significant change in China's demand for iron ore despite investor concerns about slowing steel demand in the country and weak developed economies.

Index-based spot prices slid to more than six-month troughs on Monday, after dropping about 5 percent in September, spurred by signs of slowing Chinese steel demand and uncertainty about the fate of the global economy.

China is the world's biggest buyer of iron ore -- a key steelmaking material.

"We continue to see robust business conditions for Rio Tinto products into China, particularly in iron ore. We would not foresee real significant changes in that demand profile in the next few months," CEO Tom Albanese told reporters on the sidelines of the World Knowledge Forum in Seoul.

He declined to comment on media reports that a top Chinese nuclear power generator is back in talks to buy Kalahari Minerals , in which Rio holds about an 11 percent stake. Rio also owns 14 percent of Kalahari's major asset, Extract Resources .

"We do not respond to media speculation," he said.

Kalahari confirmed on Monday that discussions had restarted with state-owned China Guangdong Nuclear Power Corp (CGNPC), after a deal earlier this year fell through in the aftermath of the Fukushima disaster in Japan. It gave no detail on price.

Albanese also said he is "comfortable with" the current quarterly iron ore pricing with South Korean steelmakers.

Global mining giants Vale , Rio Tinto and BHP Billiton last year scrapped a 40-year-old system of pricing iron ore contracts annually in favour of an index-based quarterly pricing mechanism to capture sharp swings in spot prices.

BHP said in August it was linking the majority of its sales to monthly average spot prices but continued to negotiate long-term contracts for supply volumes.

Asked about any progress in talks with Extract Resources to combine development of Husab with Rio's Rossing uranium mine, Albanese said: "Our main focus would be readying the Rossing mine for the long future ahead".
(sourced Reuters)