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.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such