Rio Tinto’s record profit aided by China’s resource demand

Mining giant Rio Tinto has posted a record first-half profit, driven by iron ore sales to China, with net earnings up 260 per cent to almost US$6.4 billion.

Rio has announced plans to spend about US$13 billion over the next 18 months, displaying its confidence in Chinese demand, even though China has started the process of slowing its rapidly expanding economy.

In its 2007 report on resource demand, re-released in March this year, Rio compared China’s demand for resources to that of Japan and South Korea in the latter half of the 20th century, and believes that China’s demand for iron ore, and other resources, will continue to grow.

In the report, Rio pointed to the fact that China’s level of exports was already higher than Japan, is still rising strongly, and will continue to do so.

Rio also believed there is much to be learned from, and a likely relationship between, economic and resource growth and demand in China, and the experience of its north-eastern neighbours during their industrial and economic changes.