(Updates with comment on iron ore in second paragraph.)
Oct. 25 (Bloomberg) -- Rio Tinto Group expects steel demand to rise in China and India as the countries continue to industrialize, underpinning demand for the commodities produced by the world’s second-largest mining company.
“Iron ore and coking coal are the two crucial ingredients for making steel, and steel is the crucial ingredient as emerging economies urbanize and industrialize,” Sam Walsh, chief executive officer of the London-based company’s iron ore unit, said today at a business forum in Perth. “The long-term steel outlook remains positive.”
Demand in China, which reported a 9.1 percent economic growth in the third quarter, will help boost profit at Rio, which relies on the nation for 27 percent of its sales, according to data compiled by Bloomberg. The company last month maintained its long-term outlook for aluminum, copper and iron ore, saying demand will double over 15 to 20 years.
Rio’s iron ore business is “set to grow substantially over the next five years,” with its annual capacity increasing to 333 million metric tons in 2015, the company reiterated in a statement yesterday. It plans to increase the workforce in its Western Australia’s Pilbara mine by 50 percent in five years, Walsh said today.
Rio shares gained as much as 2.7 percent to A$67.43 and traded at A$66.23 as of 3 p.m. in Sydney. The stock has declined 22 percent this year, compared with an 11 percent drop in Australia’s benchmark S&P/ASX 200 Index.
--With assistance from Jesse Riseborough in London. Editors: Indranil Ghosh, Keith Gosman
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