LONDON, Nov 1 (Reuters) – Africa, as the largest untapped source of growth in the mining sector, is pivotal in helping Rio Tinto and other resources companies to supply the changing needs of the huge Asian market, a senior company official said on Wednesday.
The comments, delivered at a Bloomberg forum as part of LME Week, is a vote of confidence in Africa, which has suffered from investor caution over political risk and corruption scandals.
“From a mining perspective, Africa is the largest untapped source of growth for our industry,” Bold Baatar, Rio Tinto’s chief executive of energy and minerals, said, according to a copy of his speech.
“This provides us with a huge opportunity. It provides us with the opportunity, in partnership with the east, to be part of the once-in-a-lifetime transformation story of Africa.”
Rio Tinto has strong relationships with China and other Asian customers that buy approximately 70 percent of its products.
China’s development required bulk commodities, such as iron ore, but its needs are evolving as it focuses on implementing environmental standards and seeks to lead a shift to electric transport.
The world’s biggest miner BHP has emphasised copper as its commodity of the future.
Rio Tinto, the second biggest major, has a massive copper project in Mongolia, but is also looking at less traditional commodities through its unit Rio Tinto Ventures.
They include the rare earth mineral monazite, used in heavy magnets for electric vehicles, which is produced from Rio Tinto’s mineral sands project in Madagascar.
Elsewhere in Africa, Rio Tinto in Guinea mines bauxite, used to produce aluminium, which can make vehicles lighter and more energy efficient.
Rio Tinto is selling its stake in Guinea’s giant Simandou iron ore project to Chinalco, China’s biggest state-run aluminium producer, although the deal announced more than a year ago has yet to be finalised.
Rio’s relationship with Africa has had its challenges.
It suspended one senior executive and accepted the resignation of a second after discovering $10.5 million in unexplained payments to a consultant in Guinea.
It also faces fraud allegations over coal assets it once owned in Mozambique.
Investors have this year been particularly wary of Africa after Tanzania banned unprocessed mineral exports as part of a plan to reap greater rewards from international miners, and South Africa proposed a new mining code that the industry has challenged.
(Reporting by Barbara Lewis; Editing by Mark Potter).