Rio Tinto chief says West sees need to match China to secure resources

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Developed countries are realizing they must do more to secure minerals and metals as the West seeks to replicate China’s supply chain for resources, Rio Tinto’s chief executive has said.

Jacob Stosholm said China is ahead of the West in integrated supply chains for many minerals, but he has seen a more positive attitude in the West towards mining, with more talk about accelerating mine development.

“When China builds industries, they build a strong supply chain. (West) has relied on the principle of market and fair time. It is a very good strategy until it ceases to be a good strategy,” 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 the materials needed for clean and green technologies. China dominates the supply chain of many materials underpinning the production of electric-car batteries and solar panels, with Beijing working to hit peak greenhouse gas emissions by 2030.

“People have realized that it is needed. “You won’t be able to build a new-energy system and reduce the world’s CO₂ emissions without getting enough access to many minerals,” Stosholm said of the change in attitude toward mining.

“Mining ultimately depends on social choice. , , Permits for mining have become very difficult to obtain in many western countries. But there is a lot of discussion these days on how to shorten the permit process.

In recent decades mining and processing capacity has shifted to developing countries, including China, where labor is cheaper and environmental regulation is less stringent. This has reduced the role of mining in many advanced economies, although other large miners including Rio and BHP derive a large proportion of their production from Australia.

The International Energy Agency noted last week that more than 100 policy and regulatory interventions targeting mineral supply have been implemented in the past few years, including in the US and Europe.

In one example of change, Rio is trying to gain permission to build a copper mine in Arizona the company believes could meet a quarter of US demand for decades.

Western governments are pushing to reduce their dependence on China amid growing concern over Beijing’s military aggression on Taiwan and crackdown on civil rights and ethnic minorities.

Rio’s largest shareholder is Chinese state-owned aluminum producer Chinalco. The miner is one of the world’s biggest producers of iron ore and copper and relies on sales to China, where it is expected to generate 54 percent of its $55.6 billion in 2022 revenue.

In an interview at Rio Tinto’s Oyu Tolgoi copper mine in Mongolia, which supplies the Chinese market some 80 km away, Stosholm said Rio has been urged by Western governments to reduce exposure to China, despite rising geopolitical tensions. Couldn’t handle the pressure.

The US government estimates that demand for critical minerals, including the rare earth elements, lithium and cobalt, will increase by 600 percent in the coming decade. China currently controls most of the processing and refining of such minerals.

According to forecasts published by S&P Global and Rio Tinto, global demand for refined copper alone is expected to double by 2035 to approximately 50 million tonnes annually.

Rio Tinto Chairman Dominic Barton said that although “you need to worry” about US-China tensions, the company is well positioned as a supplier of materials for the energy transition.

“We want to do more with China, and we also think there is a way to do more with the United States,” Barton told the FT. “It doesn’t make it any easier, but it makes it a little bit better (that) the climate zone we’re in.”