“The forecast is based on China growing at a slowing phase, but it’s still a pretty robust number,” Vivek Tulpule, chief economist at the London-based company, said yesterday in a presentation in Melbourne. “Steel scrap plays an increasingly more important role but, it will translate into a pretty substantial growth in iron ore demand.”
Rio has an approved spending budget of $22.4 billion on ore projects under way and plans to boost capacity in Australia’s Pilbara region to 333 million tons in 2015. Steel production in China, the biggest consumer, will peak toward 2030 from a 732 million ton annual run rate in October, Tulpule said.
China’s move to shift to a consumption-led economy would reduce the proportion of steel demand for construction to 38 percent by 2030 from 53 percent in 2010, said Tulpule. Demand from the industrial sector will account for 41 percent of the total from 36 percent in 2010, he said.
Beyond 2030, demand growth will shift to India and Southeast Asian countries such as Indonesia, he said.
Iron ore accounted for 43 percent of Rio’s revenue in the first half, ahead of aluminum, with 17 percent, and copper at 11 percent. Rio expects to produce a total of about 250 million tons of iron ore this year.