Tom Albanese, chief executive of global mining group, Rio Tinto, has said that the Chinese economy will not be completely immune from the effects of the wider financial crisis.
“In the near term, the Chinese economy is pausing for breath. China is not completely insulated from an OECD recession and we will see an impact on Chinese exports,” he warns as the company reveals its third quarter operations results.
He adds that the near-term slowdown of growth is largely the result of tightening monetary policy introduced by the Chinese government last year, aimed at tackling the country’s inflation problems.
The Olympics have also had an impact on the Chinese economy, with Albanese reporting that third quarter economic data will show an ‘exaggerated slowdown’ following the postponement of projects during the games.
However, he also notes the Chinese GDP will remain “largely driven by the domestic economy”.
China is one of Rio Tinto’s key markets, and Albanese reflects that despite these predicted problems the mining firm is well positioned to survive the economic crisis, although there will be inevitable reviews of its planned spending and project pipeline.
He comments: “Against the backdrop of the current markets, the group is taking the opportunity to review the near term spending timelines and project costs of its capital expenditure programme, while preserving the optionality of its high quality growth pipeline overall.”
The mining group’s third quarter results show that quarterly global production of iron ore is up 17% on the third quarter in 2007. Iron ore production was also up in Australia by 20% on the same time period in 2007. US coal business was also up by 13% compared to the previous year.
However, decreases were seen in mined copper which fell by 7% compared to the third quarter in 2007.
Last Updated October 15, 2008
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