CNBC Transcript: Jean-Sebastien Jacques, CEO, Rio Tinto (March 19, 2017)

Following is the transcript of a CNBC interview with Jean-Sebastien Jacques, CEO, Rio Tinto. The interview was broadcast on CNBC on 20 March 2017. All references must be sourced to a “CNBC Interview”. Interviewed by Geoff Cutmore, Anchor, CNBC at China Development Forum 2017.

Geoff Cutmore: So what we have now is the new set of growth targets for the Chinese economy, are you concerned or otherwise, that we still continue to see the glide path, still lower growth rates for China?

Jean-Sebastien Jacques: So let’s be clear, if you ask me if I’m concerned about China the answer is absolutely no for 2017. Remember we are supplying lots of products to China: copper, iron ore for steel, bauxite for aluminum, even diamonds, so we have a pretty good understanding of what the situation is in China. And today when I look at our order books, I’ve got no concerns whatsoever.

GC: What’s your broad sense of the demand picture then for full year 2017 and running into 2018?

JS: So I can only make comments on 2017, we’re still in March as we can see today. As I said, no real concern for 2017. If I look at the latest set of metrics that were issued disclosed last week in relation to infrastructure, properties, construction, all the indicators are moving in the right direction, and it’s totally consistent with the quality of the order books that we are experiencing. On top of it, I mean I can give you an example, three weeks ago we were already in China and we went to visit our customers in the Shanghai region and their order books are pretty full as well, so at this point in time, no real concern.

GC: The Chinese government itself has talked about scaling back some of its own industry, in a way of addressing some environmental concerns. How do you think that changes the supply picture globally, and what will it mean for Rio?

JS: So let’s focus on the key market for us, which is still the steel industry. There is no doubt that they will restructure their steel industry on the back of pollution issues for example. However, that doesn’t mean they will reduce the steel output. So they will shut down the smaller, less-efficient, more-polluting blast furnaces, but at the same time they will refocus all their production on the newest, largest blast furnaces. Now what it means for us, it could be a very good piece of news, lots of opportunities, and the reason why it is, in order for them to produce exactly the same output, they will have to buy higher quality raw material and that’s a great piece of news for us.

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