12th Oct 2018 06:53
LONDON (Alliance News) - Rio Tinto PLC told an aluminium investor roadshow on Thursday it expects aluminium demand to grow around 3.2% per annum for the next five years amid a "strong demand outlook".
China is expected to be broadly balanced in aluminium in the medium- to long-term, the miner said, and is anticipated to drive demand for seaborne bauxite.
Meanwhile, Rio Tinto said China is showing "determination" to curb overcapacity and reduce pollution.
The Australian miner said 3.8 million tonnes of illegal smelting capacity was removed in 2017 and 2018, with a further 800,000 tonnes cut due to the environmental winter policy.
Elsewhere, US primary metal demand is expected to grow by 300,000 tonnes per annum from 2017 to 2020.
Turning to costs, Rio Tinto said it is managing to maintain its low-cost position despite commodity headwinds.
Costs are expected to stay elevated in 2019 after raw material cost headwinds hit earnings before interest, taxation, depreciation and amortisation for the first half of 2018 by USD229 million compared to a year before. For 2018 as a whole, Rio Tinto expects raw material costs to increase by USD400 million year-on-year.
Aluminium is expected to generate USD500 million in additional free cash flow per year from 2021, offsetting further cost headwinds.
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