The chief of mining giant Rio Tinto yesterday said the global economy needed “several years of progressive hard work,” but warned against a negative over-reaction given the strength of growth in China.
Rio on Thursday booked record underlying first-half earnings of US$7.8 billion because of strong Asian demand for its commodities, and chief executive Tom Albanese said business in China continued to be strong.
However, the company was watchful given the volatile conditions, Albanese said in an interview with Australian television recorded prior to the news that Standard & Poor’s had downgraded the US credit rating, but broadcast yesterday.
“There is significant debt concerns in Europe and in the US that do need to be managed,” Albanese told the ABC. “They’re not going to fix [the debt problems] overnight and hopefully it’s just going to take several years of progressive hard work and hopefully slow economic growth to get through this quite difficult stage that, again, the markets have been in for quite a while.”
“But it’s not necessarily an environment for over-reaction, and certainly I would hope that people wouldn’t be over-reacting,” Albanese said.
In reporting half-year earnings growth of 35 percent year-on-year, the Anglo-Australian miner had last week warned of significant downside risks to growth, with credit tightening in Asia and debt jitters in the US and Europe.
However, Albanese said he expected China to provide a bright spot.
“We still would continue to believe that China will be growing this year at more than 9 percent — probably closer to nine-and-a-half percent — and that will leave global GDP growth in excess of 3 to three-and-a-half percent,” he said. “Certainly everything I’ve seen and all the discussions I’ve had would indicate to me that 9-plus-percent GDP growth should be expected this year — and that it will moderate, but it will still be well above 8 percent next year.”
Albanese said despite high commodity prices, Rio was facing -rising costs and would continue to do so in coming years.
“We’ve also seen increased labor costs, increased input costs, particularly in mining hotspots — so Queensland, West Australia, parts of South America, parts of Africa, are seeing higher than normal inflation,” he said. “It has been offset to some extent by more normalized conditions in, say, the US, Canada, etcetera, but I think this is a challenge we’re going to face not just this year, but in the coming years.”
He said these costs would impact not only operations, but also the pace and the expense of capital projects.
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Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
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