By Scott Patterson
LONDON--The war of words between mining executives over the
ill-fated iron-ore market took another twist Wednesday when Rio
Tinto PLC Chief Executive Sam Walsh lashed out against critics who
have attacked his company and others for overproducing the
steelmaking ingredient.
Mr. Walsh, as he has in the past, rejected calls to rein in
production of iron ore.
"In times of economic uncertainty, it might sound seductive or
comforting to want to put up the barriers, but we must keep markets
and trade open," he told an audience of mining executives at a
London event late Wednesday.
Iron-ore prices have tumbled to $59 a ton, earlier this year
briefly dipping below $50 a ton, from highs of about $190 a ton
reached in 2011, a surge that sent miners around the globe on a
binge to produce more. In the past few years, as a property and
construction boom in China fizzled, demand for iron has dropped off
even as production has leapt ahead. Rio Tinto produced 234 million
tons of iron ore in 2014, up from 209 million tons in 2013 and 199
million tons in 2012.
Critics such as Ivan Glasenberg, CEO of Swiss mining giant
Glencore PLC, have said major iron-ore producers such as Rio and
BHP Billiton Ltd. have helped crush prices by ramping up production
even as demand from China has tapered off. At an industry
conference in Barcelona in May, Mr. Glasenberg said miners are
suffering a "crisis of confidence" as mining giants oversupply
markets regardless of demand.
Mr. Walsh fired back Wednesday, saying that some critics "have
called it a crisis of confidence and talked themselves and others
into a gloom." He said such talk "risks becoming a negative
feedback loop" that "feeds public anxiety about our industry's
crucial role."
Instead, Mr. Walsh struck a more optimistic note. He predicted
that demand for commodities is poised to grow sharply as India's
population overtakes China's and Africa's population doubles. And
while China's growth is slowing, its economy is expected to grow
"more in the next 10 years than it has in the past 25 years," he
said.
Mr. Walsh sounded a decidedly bullish note on copper, noting
that fully electronic cars use four times the amount of copper that
a conventional car uses. "The industry faces a supply gap of four
to six million [tons of copper] per annum within a decade," he
said. "The demand signals are strong and clear."
Copper hit a 5 1/2 year low of about $5,400 a ton in January.
While it has rallied since, partly due to signs of slowing
production in Chile, it remains under pressure amid concerns about
Chinese demand, recently trading for about $5,770 a ton on the
London Metal Exchange.
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