Rio Tinto Global CEO Xia Jiesi: International trade has not slowed down due to geopolitical conflicts

Original title: Rio Tinto Group CEO Xia Jiesi: International trade has not slowed down due to geopolitical conflicts

  Source: Economic Observer Network

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Economic Observer reporter Li Zichen On November 23, 2020, Rio Tinto Group CEO Jean-Sebastien Jacques (Jean-Sebastien Jacques) told the Economic Observer network about the possible impact of international trade frictions on Rio Tinto’s business during an online interview “As far as Rio Tinto’s business is concerned, there is currently no substantial influence due to Sino-Australian relations or geopolitical relations. Our orders remain full. Demand for many products is still very strong, and there are even some other markets. The order was finally claimed by the Chinese customer.”

Xia Jiesi showed a very optimistic attitude towards the future of international trade. He believes that international trade is the source of wealth creation (6.010-0.03-0.50%) , and the global development in the past 50 years is a very powerful proof. From a broader perspective, international trade has not slowed down due to geopolitical conflicts.

“Last week, we also discussed with our colleagues that the current international freight containers are very short, and many goods cannot be transported because they cannot be ordered. This shows that although some countries have differences on the political level, international trade behavior and transactions do not seem to exist. So it was greatly affected, and the container case is a good proof.” Xia Jiesi said.

Rio Tinto is one of the world’s leading mineral resources companies. As of October 2020, Rio Tinto has exported more than 3 billion tons of iron ore to China. In the past few years, Rio Tinto’s annual global revenue was between US$40-50 billion, of which more than 50% came from China. In addition to supplying China with mineral resource products required by the market, Rio Tinto also purchases equipment and raw materials required for production from China, with an annual purchase amount of approximately US$1.5 billion.

It is worth noting that with the increase in the proportion of China’s business in Rio Tinto, the cooperative relationship between this national international mining company and China is becoming more diversified and three-dimensional, which also makes the two parties more dependent on each other in the future.

Deepening in China

Rio Tinto has a long history of joint venture cooperation with China.

In the past four or five years, Rio Tinto has achieved very outstanding cash returns, with a total cash return of $38 billion to shareholders. Among them, China’s central enterprise- Aluminum Corporation of China(4.0700.000.00%) is the world’s largest single shareholder of Rio Tinto.

In October 2020, Rio Tinto and China Baowu Group celebrated the milestone of their joint venture (Baoruiji Iron Ore Joint Venture) to ship 200 million tons. In fact, 33 years ago, Rio Tinto started a joint venture with a Chinese company in Chana Iron Mine in Australia.

In terms of investment in China, Xia Jiesi introduced to the Economic Observation Network that Rio Tinto has made new breakthroughs in China’s sales channels. In addition to the traditional shipping market, the company has also begun to engage in direct port spot sales. Rio Tinto now operates in 11 ports in China and has provided services to more than 80 new customers through new spot companies.

In terms of project development, Rio Tinto is currently discussing the continuation of the Baoruiji joint venture cooperation with Baowu to jointly develop the Pilbara West Slope Mine. In terms of more upstream investment, Rio Tinto and China Minmetals have established an exploration joint venture company, hoping to find high-quality mineral resources in China.

There are other types of investment, including the past few years and the State-owned Assets Supervision and Administration Commission of the State Council in the training of talents for sustainable development, to build the capacity of senior managers of Chinese enterprises in sustainable development and international operations.

In terms of some innovative partnerships, from a Chinese perspective, Rio Tinto’s cooperation with Tsinghua University and Baowu in low-carbon transformation is one of them.

In November 2020, Rio Tinto further deepened its cooperation with Tsinghua University and pledged to invest 30 million yuan in the next five years to support the Tsinghua-Rio Tinto Joint Research Center for Resources, Energy and Sustainable Development (Joint Research Center) to carry out related research.

According to Rio Tinto, the above-mentioned research centers will continue to pay attention to sustainable development issues and focus on promoting issues related to supporting Rio Tinto’s 2050 net zero emission strategy. At the same time, the research center will also support the Rio Tinto-China Baowu-Tsinghua University cooperation to jointly improve the carbon emission reduction and environmental benefits of the entire industrial chain of the steel industry.

Rio Tinto and Tsinghua University established a joint research center in 2012 to bring together top Chinese and international experts to jointly research, create and share best practices in the field of sustainable development. In the past 8 years, the center has published nearly 90 academic papers in the fields of energy, resources, and sustainable development, and drafted and submitted many relevant policy recommendations every year.

Simandou Iron Mine

The Simandou iron ore project that Rio Tinto has cooperated with Chinalco is also one of the development project cooperation currently being promoted.

Public materials show that Simandou iron ore is located in Guinea, West Africa, and is a world-class large-scale high-quality open-pit hematite. It has 2.4 billion tons of controlled and inferred iron ore reserves that comply with the Australian Joint Ore Reserves Committee (JORC) standards, and the estimated total resource is close to 5 billion tons. The overall ore grade of the project is 66-67% and ranks among the top in the world.

In the past ten years, Simandou’s mining rights have undergone several changes. There are currently 4 blocks in the mining area. Blocks 1 and 2 are controlled by China Shandong Weiqiao Venture Group and Singapore Winning Venture Group; Blocks 3 and 4 are jointly controlled by Rio Tinto, Chinalco and the government of Guinea , The shareholding ratio is 45.05%, 39.95% and 15% respectively.

On the same day, regarding the progress of Simandou iron ore, Xia Jiesi said: “I think Simandou will eventually be developed, because this is a very high-quality resource and there is a long-term demand for iron ore in Europe and China. The market is very attractive. Now we are also doing a lot of work, especially in the project infrastructure program research is cooperating with many Chinese engineering companies, trying to find the most economical solution for this project. It also includes plans for joint infrastructure cooperation in Block 1, 2, 3, and 4.”

Xia Jiesi said: “Cooperation is the key, Rio Tinto also maintains a very open attitude towards cooperation, whether it is to cooperate with existing partners, Chinalco, Baowu, or Win Alliance, we are all open. In addition. , There is also a very important stakeholder, the government of Guinea. It is very important to ensure that they also approve and support our cooperation plan.”

Xia Jiesi will leave Rio Tinto in 2021. This executive who has maintained good interaction with the Chinese media has worked for Rio Tinto for 9 years, including 5 years as the CEO of the mining company. The CEO said that China is very important to Rio Tinto’s present and future. Although he is about to leave Rio Tinto, he is sure that the momentum of Rio Tinto’s cooperation with China will not diminish.

“More than 50% of Rio Tinto’s global revenue comes from the Chinese market, and this proportion reached 55% in the first half of 2020. Because China’s demand for Rio Tinto’s products, including iron ore, copper, and aluminum-related products, has been very high. Strong. I think that Rio Tinto’s long-term success will be the key factor in its cooperation with China.” Xia Jiesi said.

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