Rio Tinto chief says west recognises need to match China on mineral supply
Developed countries are realising they must do more to secure minerals and metals as the west attempts to replicate China’s supply chain for resources, Rio Tinto chief’s executive has said.
China was ahead in having integrated supply chains for many minerals, said Jakob Stausholm, but he detected a more positive attitude in the west towards mining, with more talks on how to accelerate mine development.
“When China builds industry, they build a robust supply chain. [The west] has relied on a market and a just-in-time principle. That’s a very good strategy until it is not a good strategy any more,” he said in an interview with the Financial Times.
“China is in a good position because they have planned for it. The west is now starting to do what China has historically always done.”
Governments from Washington to Brussels are racing to secure materials required for clean and green technologies. China dominates the supply chain for many of the materials underpinning the production of electric car batteries and solar panels, with Beijing working to hit peak greenhouse gas emissions by 2030.
“People realise there is a need for it. You will simply not be able to build a new-energy system and reduce the world’s CO₂ emissions without getting sufficient access to a number of minerals,” Stausholm said of the shift in attitude towards mining.
“Mining ultimately comes down to societal choices . . . in a number of western countries, it has been very difficult to get permits for mining. But there’s a lot of dialogue these days on how to shorten the permit processing.”
In recent decades mining and processing capacity has shifted to developing countries, including China, where labour is cheaper and environmental regulation less stringent. That has led to the diminished role of mining in many advanced economies, though Rio and other large miners including BHP derive a huge share of their output from Australia. The International Energy Agency last week noted that more than 100 policy and regulatory interventions targeting mineral supplies have been enacted over the past few years, including in the US and Europe.
In one example of the change, Rio is trying to secure permission to build a copper mine in Arizona that the company believes could meet a quarter of American demand for decades.
Western governments are pushing to reduce their reliance on China in the midst of increasing concern over Beijing’s military assertiveness over Taiwan and crackdowns on civil rights and ethnic minorities.
Rio’s largest shareholder is Chinalco, the Chinese state-owned aluminium producer. The miner is one of the world’s biggest producers of iron ore and copper and depends on sales to China, where it generated 54 per cent of its $55.6bn of revenues in 2022.
Stausholm, interviewed at Rio Tinto’s Oyu Tolgoi copper mine in Mongolia, which supplies the Chinese market about 80km away, said Rio had not faced pressure from western governments to reduce exposure to China despite rising geopolitical tension.
The US government estimates that demand for critical minerals including rare earth elements, lithium and cobalt will surge by as much as 600 per cent over the coming decade. China currently controls most of the processing and refining of such minerals.
Global demand for refined copper alone is expected to double to about 50mn tonnes annually by 2035, according to forecasts published by S&P Global and Rio Tinto.
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