The head of the world’s second-largest mining company says that despite ongoing economic and geopolitical challenges, global demand for mined metals and minerals remains strong.

“Everybody says that it's a very difficult world we are living in, and certainly there is a lot of geopolitical uncertainty, there's even wars now, but the world is growing,” Rio Tinto Group CEO Jakob Stausholm said in an interview.

Stausholm made comments to BNN Bloomberg’s Andrew Bell at the Prospectors & Developers Association of Canada (PDAC) convention in Toronto on Monday morning.

Rio Tinto’s global mining operations are underpinned by its iron ore division, which accounted for roughly 80 per cent of its profits last year. Stausholm said iron ore demand from China, the world’s largest metal consumer, remains strong in the face of economic weakness in markets like real estate.

He added that China’s economy grew around five per cent last year, and the property market “probably contracted, but what we see is that there's a lot of infrastructure being built and there's also a lot of industrial expansion.”

“A lot of that is underpinned by building the energy transition. What you see in China is large-scale development of solar energy, wind power and extension of the grid… all those things require steel, copper and aluminum,” Stausholm said.

Stausholm said steel demand is also rising fast in India due to its continued expansion of infrastructure. India is currently self-sufficient in iron ore production, but will likely become an importer of the material soon, he added.

“You typically see a development pattern for a country where at the beginning, you have a very low steel intensity and then the steel intensity goes up,” Stausholm said.

“China is kind of at the top of the cycle now and India is on its way up, so there will be a lot of demand for steel in India.”


Copper expansion 

In recent years, Rio Tinto has focused on building out its copper production capacity, as the metal becomes increasingly valuable amid the clean energy transition.

Stausholm said the company is ramping up production at its Oyu Tolgoi copper mine in Mongolia following years of delays, cost overruns and disputes with the local government.

“We have had an asset that we have developed for many years that still hasn't given us revenue, (but) the technical ramp-up is going very well,” he said, adding that it will be the fourth-largest copper mine in the world at peak production.

“It will generate a lot of revenue, so copper is a very important division for us. It will be very profitable and it's certainly growing.”


Aluminum presence in Canada

Stausholm said the “heart” of Rio Tinto’s aluminum business lies in Canada’s Saguenay–Lac-Saint-Jean region, where around half of the company’s global aluminum production is based. The miner also has aluminum projects in British Columbia, which he called “massively impressive.”

Stausholm also touted Rio Tinto’s production of aluminum in Canada as “the lowest carbon business in the world,” referring to the company’s use of hydroelectric energy to power the projects.

“We both have our own lakes and own the hydropower stations and we buy hydro energy… Canada is blessed by having hydropower,” he said.

“We are producing the lowest CO2-intense aluminum on the planet – we still have to get a premium for that and the prices unfortunately have fallen, so we have had limited profitability, but I'm quite bullish about the future of aluminum.”