Rio Tinto projects need of extra aluminium capacity outside China after next two to three years

According to Rio Tinto, aluminium inventories in the world outside China would decline in next two to three years as demand will see a quicker growth. Alf Barrios, the chief executive officer of Rio Tinto Aluminium said this in an interview recently.

“We see aluminium demand growth being extremely healthy,” Barrios said.  

Aluminum producers outside China will need to build additional smelting capacity as inventories will decline with growing demands and closed capacity.

According to him, North American consumption would gain as the Electric Vehicle revolution is getting momentum.

 “People believed China was going to be a significant net exporter to the rest of the world in the future, I think people now see China being more balanced,” he said emphasising on the changing role of China from an export economy to manufacturing economy. 

Primary aluminium inventory in the London Metal Exchange managed warehouses fell for a second quarter in the September quarter and plunged to the lowest level since 2007 in the last month. Bloomberg Intelligence has forecasted a positive medium-to-long outlook on aluminium based on global deficits persisting over the next three years. However, Goldman Sachs Group Inc. feels the market is still tight with Rusal sanction still in place.

According to Barrios, inventories would come down to historically low levels in the next couple of years with growing consumption.

“You still have spare capacity in China, which will have to be absorbed by demand growth,” he added.  “We’re at an inflection point now that could result in a shift in the prospects for capacity outside of China.”

Rio is confident of their operations in Canada and considers them uniquely positioned. The company is planning brownfield expansions in Quebec and is getting ready to cater to the shifting market conditions.