Rio Tinto CEO Tom Albanese – PDAC Speech Brief Summary

Rio Tinto CEO, Tom AlbaneseYesterday, Rio Tinto CEO Tom Albanese gave a keynote lunch speech on the last day of the Prospectors and Developers Association of Canada’s annual convention in Toronto, Canada. The following is a brief summary of some of his major points.

One of his first comments was on how pleased Rio Tinto was to expand into Canada with the friendly takeover of Alcan. The company now has 14,800 employees in this country, of which 10,300 are with Rio Tinto Alcan.

Albanese is a strong believer in the commodity super-cycle and feels the American economic problems will not impact the mining industry. “Important as the US is to the world economy, it is not as influential as it once was to the global demand for metals and minerals. We are firmly of the view there is an economic de-linkage between China on one hand and the rest of the world, especially the US, on the other,” said Albanese.

Rio Tinto feels that a possible US recession will only impact Chinese GDP growth by about one per cent or less.

A very interesting point was that over the next 30 years the world will need twice as much copper as previously used in all of world history. “The most basic challenge is the need to find the big orebodies in a world hungry for metals,” Albanese said.

The CEO feels that consolidation is one the answers to being able to compete for skilled workers, capital, develop improved technologies and reduce costs. The takeover of Alcan will reduce costs at the company by about $940 million a year due to synergies.

Investments in exploration and technological research and development are key priorities for the company in order to supply growing demands for all metals.

Albanese highlighted the challenges by the worldwide skills shortages. Women and Aboriginal people must be persuaded to enter the industry if skills shortages are to be overcome.

“In Australia, we’ve made a special effort to engage with indigenous people, many of whom live where we work. …. Ten years ago, indigenous people made up less than 0.5 per cent of our workforce in Australia. Today they account for more than seven per cent or 1,200 people and our intention is to significantly increase that figure,” Albanese said.

At the company’s Diavik Diamonds mine in the Northwest Territories, almost 70 per cent of the workforce are northerners and about one third identify themselves as Aboriginal.

Albanese also stressed the reasons for the company board or director’s unanimous rejection of the BHP Billiton offer.

“Rio Tinto is all about value. The conditional offer fails to recognize the underlying value of our high quality assets and prospects,” he said. CEO Tom Albanese’s entire speech will be posted tomorrow.