Rio Says Africa May Be Next Growth Region, Plans Board Visit

Rio Tinto Group, the world's third- largest mining company, said the board will visit Africa next month, underlying its view the poorest continent may become the next growth region in 20 years and sustain the commodity rally. Rio and rivals are planning new mines in the region, which will spur economic development, Sam Walsh, head of Rio's iron ore unit, said today in Melbourne. London-based Rio is studying a $6 billion iron ore project in Guinea. Miners committed to a record $34.7 billion of projects in Africa last year, a gain of almost 61 percent from the previous year, according to Stockholm-based Raw Materials Group. Surging demand for raw materials from China has spurred a rally that's driven copper, nickel and iron ore prices to records. ``Twenty to 25 years ago, if I had said China will be a big opportunity, people would have said there are all sorts of issues associated with China,'' said Walsh in an interview. ``If I can be very brave, Africa in 15 to 20 years time frame will be on the agenda as well.'' Sub-Saharan Africa, where per-capita income is less than a 70th of the U.S., is the source of most of the world's gold, platinum, bauxite and manganese. The Democratic Republic of Congo, Guinea, Angola, Mali, Senegal, and Algeria are countries that are ``very prospective,'' said Walsh. Miners who weren't sure about investing in the region are moving into the continent, he said. `Next China?' ``The Rio Tinto board will be visiting Africa in September as part of identifying the importance of Africa for the future,'' said Walsh. ``I'm not suggesting the tide will turn tomorrow and Africa will be the next China, but these things need to be on the radar screen.'' Citigroup Inc. in 2005 said metals may be entering a ``super cycle,'' driven by demand from emerging economies. Rising industrial production growth in China, India, Brazil and Russia will continue to spur demand for raw materials, Deutsche Bank AG said in 2006. Rio is studying a phased expansion of its Australian iron ore output to 320 million tons, from an expected 220 million tons in 2009, and a possible plan is to add 50 million tons by 2012 and 2013, Walsh said today. ``The world increase in demand in iron ore is 50 to 60 million tons a year,'' said Walsh. Fifty million tons ``is a big chunk, but it equals just one year of growth,'' he said. Rio is spending $5 billion to expand its Australian mines, rail and ports. Surging demand from steelmakers in China, the world's biggest producer and consumer of the alloy, has sent the price of iron ore up five years to a record. It may rise 25 percent next year, Credit Suisse Group said. Rio also plans to complete a feasibility study on expanding iron ore production at its Corumba project in Brazil in the next six months, and then will seek board approval, Walsh said. The project is producing about 2 million tons of ore, and the plan is to take it to 7.5 million tons. Steelmakers in China and Japan have already asked Rio when it would expand Corumba's production to 15 million tons, Walsh said. He declined to say how much the expansion would cost.