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Rio Tinto Eyes Emerging Markets

Rio Tinto’s CEO Tom Albanese is confident about the future of the company.

Similar to a year ago, Albanese is looking at emerging markets, which include China, India, Southeast Asia, and the Middle East. They continue to move from strength to strength. The U.S., Europe and Japan are still growing, albeit more slowly, which puts additional demand on iron ore, steel, copper, and aluminum—things that Rio produces.

“One of the unintended consequences of the digital revolution is that we have five billion cell phones out there…five billion people who have aspirations to live better than their parents,” Albanese said. This phenomenon is leading to growth in demand for steel and aluminum, a trend that could go on for next 10-20 years. Over one billion people outside of the United States are joining the middle class. At this point, “demand has greatly exceeded supply,” he said.

A big concern for Rio Tinto’s future is inflation. “[We are] seeing inflation hit our inputs,” he said. Now, budget tightening is important.

Davos 2011 - See Complete Coverage
Davos 2011 - See Complete Coverage

With regards to Europe, Albanese says that while people continue to buy automobiles and to build things, they are doing it at a slower pace. Consumer electronics will be a quicker market. Even the U.S., which was hit bad by the financial crisis, is recovering, he said.

Albanese plans to grow Rio Tinto both organically and through acquisition. There are programs in the works for organic growth and the company is looking at moderate-sized M&A, he said. He also plans to continue to expand and to increase production of iron ore by over 50% over the next five years, with new copper projects in Mongolia.

He sees global economic risks around resource competition, nationalism, and geo-political tension. Albanese also sees a period of shortages and a lot of people trying to invest at same time.


Donna Burton, Kerima Greene and Crystal Lau contributed to this blog.

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