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Rio Tinto's Albanese Says Markets Continue to Improve (Update1)
Aug 20, 2010 13:40CST

Aug. 20 (Bloomberg) -- Rio Tinto Group, the world's third- biggest mining company, said markets are continuing to improve and Chinese demand for consumer-related commodities will gain as the economy develops.

"Some commodities, like diamond and industry minerals are picking up in the first half," Rio Chief Executive Officer Tom Albanese told reporters today in Shanghai. "Consumer-oriented commodities are beginning to see demand in the Chinese market as a constructive maturation of Chinese economy."

Albanese yesterday said economic expansion in China, the biggest metals user, may slow to as low as an annual 6 percent this decade after a 30-year run averaging 10 percent growth. The Chinese government has been seeking to bolster consumer spending by cutting tax on car purchases and providing subsidies on household appliances, to reduce its reliance on export earnings.

Rio, which gets almost a quarter of its sales from China, fell 2.8 percent to A$71.13 at 2:16 p.m. in Sydney trading.

Rio is still seeking approval from countries including China for its proposed iron ore joint venture with BHP Billiton Ltd., Albanese said today. The two companies, the world's second- and third-biggest iron ore exporters, want to combine their Australian operations in a 50-50 venture to save at least $10 billion in costs.

The venture in Western Australia won't proceed because regulations are yet to rule on the plan, the Sydney Morning Herald reported this week, citing an unidentified mining executive involved in the discussions.

The technical argument for the venture continues to be "strong," Albanese said. "The synergies are indisputable and are large. They are a prize that's worth everything we can do to achieve."

Albanese declined to comment when asked if Rio would bid for Potash Corp. of Saskatchewan Inc. Potash, a crop nutrient, is an "interesting mineral," he said, without elaborating.

BHP Billiton, the world's biggest mining company, this week made a hostile $40 billion offer for Potash Corp.

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