Rio Tinto Group isn’t just bullish about China’s steel demand, it’s also upbeat about copper use in the world’s biggest consumer.
Signs of improvement in China’s property market are boosting prospects for the metal, Jean-Sebastien Jacques, head of Rio’s copper and coal operations, said in an interview in Singapore. The government will also implement more stimulus measures if the world’s second-largest economy slows too much, he said.
Rio’s optimism stands out amid views from Glencore Plc that mining companies were wrong-footed on a slowdown in China, with demand getting tough to call. The country’s grappling with overcapacity, a downturn in property investment and a volatile stock market that threaten Premier Li Keqiang’s growth target of about 7 percent for this year.
Rio has a direct insight into the Chinese market through its Oyu Tolgoi operations in Mongolia, located north of the Chinese border, Jacques said.
“Pretty often people use copper as a proxy of the health of the Chinese economy,” Jacques said on Monday. “When I look at the order books that we have, we have no issues whatsoever in placing the products out of Mongolia being sold into China. That gives us confidence there’s demand for our product.”
Concern that a weaker China will undermine demand and exacerbate supply gluts are hurting miners’ profits and shares. Shares in Rio fell 13 percent in Sydney this year, while BHP Billiton Ltd., the world’s largest mining company, dropped 10 percent. Glencore’s lost more than half its market value in London this year. Copper plunged 16 percent in 2015 and is near a six-year low.
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