Barcelona, Spain — MININGREVIEW.COM — 14 May 2009 – Top international mining groups Anglo American Plc and Rio Tinto are wary about when hard-hit commodity markets might recover, but they are confident about the long-term health of the sector.
Rival Xstrata – which along with its rivals gave presentations at Merrill Lynch’s mining conference in Barcelona – said early signs pointed to China driving a rebound in commodities demand, but did not say when the recovery might take hold.
Anglo chief executive Cynthia Carroll said there were scant signs of an early rebound in demand.
“Demand is likely to remain weak in the near term, and timing for recovery remains uncertain,” said a presentation on Anglo’s website for Carroll’s speech at the conference, to which media were not invited.
A chart showed demand for copper was expected to fall 7% this year, iron ore by 8% and platinum by 9%. At the same time, Chinese steel inventories have shot up by 56%, another graph showed.
Rio Tinto CEO Tom Albanese told the conference that the outlook remained uncertain despite some signs of recovery. “The long-term story remains intact. Urbanisation in developing countries will not be derailed by the current downturn,” Albanese’s presentation added.
Xstrata CEO Mick Davis also held up China as a positive sign. “Key Chinese growth drivers of domestic consumption and fixed asset investment remain resilient,” the presentation said.
All three CEOs argued that their companies were well positioned to weather the downturn, after taking quick action to bolster balance sheets and cut costs.
Carroll said Anglo’s debt situation was under control after the group had raised US$3.7 billion (R33 billion) in bond issues, got US$1.8 billion (R16 billion) by selling its remaining stake in AngloGold Ashanti, and saved US$1.6 billion (more than R14 billion) by suspending its dividend.
Xstrata cut debt after a successful US$5.9 billion R53 billion) rights issue, and Rio Tinto will be able to halve its heavy debt burden if it concludes a US$19.5 billion (R175 billion) deal with China’s Chinalco.