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China's ore demand will not be dimmed by US recession, says Rio Tinto

China's ore demand will not be dimmed by US recession, says Rio Tinto

Beijing: Rio Tinto, fending off a US$114 billion takeover attempt from its rival mining company BHP Billiton, says the "extremely strong" iron ore market will last and that there is no slowdown in Chinese demand for commodities, according to the Sydney Morning Herald.
"We still continue to see a strong market in China for all that we sell, and we don't see any signs of that changing," Rio's chief executive, Tom Albanese, said in in Beijing on Friday. He also reiterated Rio's rejection of BHP's 3-for-1 share-swap bid.
Meanwhile, BHP Billiton's board will meet this week to discuss strategy as it faces the prospect of having to raise its price or go hostile after Britain's Takeover Panel set a deadline of February 6 for it to put up or shut up.
As the deadline looms, a war of words has erupted over prospects for China, where the two mining giants have taken big opposing bets about the country's future demand for commodities.
Industry players say BHP has been talking down the market in China as a way of flattening Rio's share price. Others deny this. Rio is a much larger player in China than BHP, which believes growth there will be hit by a recession in the US this year.
Rio has said that even if the US does go into recession, Chinese consumption of commodities will continue unchecked. China consumes about 45 per cent of the world's production of iron ore.
And Rio's chief economist, Vivek Tulpule, has said China could benefit from a US recession by attracting investment capital previously earmarked for the US.
China's economy expanded more than 11 per cent for the fourth straight quarter, supporting global growth and demand for iron ore, copper and aluminium as a possible recession looms in the US.
Mr Albanese is visiting China as iron ore producers are in talks with steelmakers to settle annual contract prices, which might rise 70 per cent, Credit Suisse Group said this month.
"In our view, if there was a possible recession in the US it will only have about 1 per cent impact on Chinese GDP," Mr Albanese said after visiting Chinese clients and officials. "We continue to see strong market conditions and prices."  [28/01/08]


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