Rio Tinto, the third largest mining company in the world, estimates that the demand from China will be key to its growth, but inflationary trends will be a concern, according to Mr David Peever, Managing Director, Rio Tinto – Australia.

Rio Tinto believes that the demand for minerals and secondary metals will double over the next decade-and-a-half essentially driven by China.

India is also set to emerge a major production and market base for the company, with its economic growth along with that of China having a major impact on the mining sector, he said.

But the coming 10-15 years will not be without rough patches as inflationary pressures driven by the economic growth of the two of world's largest economies, India and China, and the imbalances after the global financial crisis and removal of stimulus packages will take their toll. The company will focus on high output and relatively low-cost — tier-1 — mines, which it will expand.

Last year, China accounted for about 28 per cent of Rio Tinto's $14.32-billion revenue against 24 per cent in the previous year. China is the largest market for the company's output, and Rio Tinto's growth is occurring on the back of industrialisation of China, where the demand continues to grow quickly.

Capacity expansion

Since the beginning of 2010 it has invested $12 billion in capacity expansion, with $9 billion going into iron-ore output growth mostly in Western Australia. That will see its iron-ore output of about 225 million tonnes grow to 283 million tonnes in two years, and will add as much in the next two years. It is adding a third of its capacity built over 50 years, in just five years. More than 75 per cent of its revenue is from iron ore. Expansion plans are in the pipeline at various locations across the globe.

Rio Tinto has also announced expansion programmes in India. While not on the scale of investments planned in Western Australia where the bulk of its focus will be, India will be one of its tier-1 locations, Mr Peever told a group of journalists from India on a tour organised by the Department of Foreign Affairs and Trade of the Government of Australia.

In India, Rio Tinto has announced a diamond-mine project in Bunder, Madhya Pradesh, where it plans to invest over $500 million. It also has a 51-per-cent stake in the joint venture with Orissa Mining Corporation for an iron-ore mining project in that State.

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