Nov 4, 2011 (Bloomberg) -- Europe may fail to find a sustainable solution to its debt problems because of “intractable” economic imbalances, said the chairman of Rio Tinto Group, the world’s second-largest mining company.

"It has become painfully obvious the countries in the euro zone are locked together in a straitjacket and that the founders of the single currency have thrown away the keys,” Jan du Plessis said today at a business forum in Sydney. "These economic imbalances and the respective sets of cultural values that gave birth to them are so intractable that it is very hard to see any solution truly sustainable over the long term.”

Sovereign-debt problems that initially began in Greece and are spreading to Portugal, Spain and Ireland posed a "threat” to euro-zone stability, du Plessis said. With Greece’s debt- ridden government at risk of collapsing, Group of 20 chiefs meeting in Cannes, France, yesterday pushed European authorities to flesh out and enact a week-old rescue plan.

"China would be fairly resilient to even a quite sharp correction in the” economies of the developed countries, said du Plessis. China, the world’s biggest buyer of metals, is Rio’s largest market, accounting for 28 percent of 2010 sales. The company relied on Europe for 14 percent of its revenue last year.

Rio, which reported a 5 percent increase in iron-ore output and record coking-coal production in the third quarter, kept its long-term demand outlook for aluminum, copper and iron ore in September, saying it will double over 15 to 20 years as China continues to industrialize.

Iron ore tumbled 28 percent on the cash market this quarter amid weak demand from traders and steel mills in China. Prices may drop further to $95 a metric ton before rebounding next year, according to a Morgan Stanley estimate last month. Ore for immediate delivery in China was at $122.70 a ton yesterday, according to an index compiled by The Steel Index Ltd.

"In the long run, iron-ore prices will reflect a strong demand in China for steel,” du Plessis said. “That view hasn’t at all been impacted by anything that has happened in the market or in China over for the last few weeks.”