- The war of words between mining executives over the ill-fated iron-ore market took another twist Wednesday when Rio Tinto PLC Chief Executive Sam Walsh lashed out against critics who have attacked his company and others for overproducing the steelmaking ingredient.
Mr. Walsh, as he has in the past, rejected calls to rein in production of iron ore.
"In times of economic uncertainty, it might sound seductive or comforting to want to put up the barriers, but we must keep markets and trade open," he told an audience of mining executives at a London event late Wednesday.
Iron-ore prices have tumbled to $59 a ton, earlier this year briefly dipping below $50 a ton, from highs of about $190 a ton reached in 2011, a surge that sent miners around the globe on a binge to produce more. In the past few years, as a property and construction boom in China fizzled, demand for iron has dropped off even as production has leapt ahead. Rio Tinto produced 234 million tons of iron ore in 2014, up from 209 million tons in 2013 and 199 million tons in 2012.
Critics such as Ivan Glasenberg, CEO of Swiss mining giant Glencore PLC, have said major iron-ore producers such as Rio and BHP Billiton Ltd. have helped crush prices by ramping up production even as demand from China has tapered off. At an industry conference in Barcelona in May, Mr. Glasenberg said miners are suffering a "crisis of confidence" as mining giants oversupply markets regardless of demand.
Mr. Walsh fired back Wednesday, saying that some critics "have called it a crisis of confidence and talked themselves and others into a gloom." He said such talk "risks becoming a negative feedback loop" that "feeds public anxiety about our industry's crucial role."
Instead, Mr. Walsh struck a more optimistic note. He predicted that demand for commodities is poised to grow sharply as India's population overtakes China's and Africa's population doubles. And while China's growth is slowing, its economy is expected to grow "more in the next 10 years than it has in the past 25 years," he said.
Mr. Walsh sounded a decidedly bullish note on copper, noting that fully electronic cars use four times the amount of copper that a conventional car uses. "The industry faces a supply gap of four to six million [tons of copper] per annum within a decade," he said. "The demand signals are strong and clear."
Copper hit a 5 1/2 year low of about $5,400 a ton in January. While it has rallied since, partly due to signs of slowing production in Chile, it remains under pressure amid concerns about Chinese demand, recently trading for about $5,770 a ton on the London Metal Exchange.