Dialogue Riot Global CEO Ai Bo (map)

Compared with Vale, BHP Billiton (BHP), which is also a mining giant, Rio Tinto is more willing to show the outside world its engineering power in mineral exploration and exploitation and establish long-term relationship with China. s plan.

This is inextricably linked to Tom Albanese’s philosophy and experience. The 54-year-old Abena likes to call him a "geologist." If he starts his 18-year-old involvement in the exploration of the first copper project, Abena has been working in the mining industry for 36 years.

Abena joined Rio Tinto in 1993. At that time, after Rio Tinto acquired Nerco, Abena was appointed as the general manager of Rio Tinto Greens Creek in the context of Nerco's chief operating officer. In 1995, Abena was sent to Rio Tinto's headquarters in London to take over as Group Exploration President. In 2007, Alban officially served as CEO of Rio Tinto.

Over the years, Aibo Nian has played a key role in the development of the company’s major affairs, planning and implementing Rio’s strategic direction. Under Albania's leadership, Rio Tinto differentiates itself from the rest of the world's mining giants with its strong exploration technology and unique mine management experience. For example, compared with the old rival BHP Billiton, Rio Tinto pays more attention to the accumulation of professionalism, and BHP Billiton is good at capital operation.

At the same time, compared with executives from other multinational corporations, Abe’s visit to China has been particularly fast. This year, Albania has come to China a total of five times, and at least seven times last year.

"We hope that the relationship with China will become better and healthier. We value the long-term relationship with China very much," Alban stressed in an interview with our reporter.

Deepen China's relations

"21st Century": We have noticed that since the arrest of four Rio Tinto employees in 2009, you have made a lot of efforts to maintain the relationship with China. How are you currently positioning your relationship with China?

Aibo Nian: First of all, I want to emphasize that the relationship between Rio Tinto and China is not limited to the relationship between suppliers and customers. Our relationship with China is a long-term strategic partnership. This relationship is based on the benefit of all parties, and of course it is based on our relationship of being a good supplier and a good customer.

We have opportunities for potential cooperation projects with Chinese companies globally.

Chinalco is not only the single largest shareholder for us, but also a partner of two of our big projects. The first project is our iron ore project in Simandou, Guinea, West Africa, and the second is we followed the end of last year. Aluminium signed an exploration joint venture company, mainly for mineral exploration activities in China. China is also our very important customer. Our sales in China have risen from about 10% in 2004 to about 30% currently.

"21st Century": What specific work has been done in deepening the strategic partnership with China?

Aibo Nian: Let me talk about the Ximandudu iron project. I am very happy to have a chance to visit Guinea together with China National Aluminum Corporation’s bear master. During our visit to Guinea, we not only went to the mine, met residents of the local community, and employees of our local Simfer company also met with the President of Guinea. Government officials within.

This joint visit not only saw the situation of the project itself, but also saw the scale of the project and the challenges and opportunities that will arise in the future.

We believe that this project is a good opportunity for cooperation. We also closely communicated and cooperated with the Guinean government to contribute to the economic development of Guinea and to the improvement of the living standards of the Guinean people. I sometimes joke on the journey. “Now we are on a boat. We must work together and work together to produce the first ship of iron ore as soon as possible.”

When I was 18 years old, I entered Alaska to participate in the exploration of a copper mine project. This began my career as a geologist. Therefore, the opportunity to have a joint venture with Chinalco and do exploration in China is very exciting for me. Through this joint venture company, we can use the most advanced technology in the world today to explore exploration projects in China. We very much hope that the joint venture will achieve some results as early as possible.

Then talk about some procurement matters. We have provided China with a variety of mineral products to support China's development. At the same time, we also purchase equipment from China, or some other products.

Earlier this year, we set a goal for the procurement team. Last year, their purchases from China were US$500 million. The target of our purchase this year is US$1 billion. I very much hope, or say very much willing to see that they can complete this $1 billion purchase amount in advance.

We also spend some time developing non-business activities to increase mutual understanding among our peoples.

"21st Century": Since the failure of the annual iron ore pricing mechanism in 2010, Rio Tinto began to use index pricing, but this pricing method has been opposed by Chinese steel companies. At present, the China Iron and Steel Association has launched the "Chinese iron ore "The price index", and asked to renegotiate the pricing mechanism with the miners, will consider renegotiating with China?

Abena: We have always emphasized the transparency of the price mechanism and insisted on such principles. More than a year ago, when the price of iron ore was transferred from the annual price to the quarterly price, we considered that the quarterly price was a more mature pricing mechanism, so we adopted it.

We have always been concerned about the emergence of new pricing mechanisms, as long as the new pricing mechanism is transparent and can correctly reflect the relationship between supply and demand, we will seriously consider.

As the Chinese iron ore price index has just been introduced, it is still new to us. We need to spend some time studying and observing.

With regard to the iron ore price model, we now have quarterly prices, monthly prices, and spot prices. This combination provides a complete set of options for consultation with individual customers and is ideally suited to the current changing market.

Ensure financial health

"21st Century": During the financial crisis in 2008, you were financially distressed by the acquisition of Alcan. At present, the sovereign debt crisis in Europe and the United States has caused commodity prices and demand to decline again. Will your investment plan be adjusted accordingly?

Abena: Compared to 2008, our current balance sheet is very healthy. We are also very clear that the economy will always have cyclical changes. At this stage, we are making any investment decision on the premise that we must first ensure that the company's balance sheet is a reasonable and healthy state.

Although we have some concerns about the economic development of the entire world, we are full of confidence in China’s future. Because the process of China's industrialization and urbanization are all under development, these very good factors have a positive orientation to our business. This is why we will spend a lot of energy to cooperate with Chinese companies.

Of course, China is not saying that it can do its own thing. Like the European debt crisis, the decline of the US economy will undoubtedly lead to a deterioration of the global economic environment, but we are still full of confidence in China itself.

"21st Century": Since every mineral product has its periodicity, products now being sought after by the market will fall to the bottom after several years. Therefore, the diversified configuration of products is the strategy chosen by many mining companies around the world. How do you plan the company's product structure? For example, will you invest in potash, rare earth, and other hot products to slow down iron ore investment?

Abena: We have always emphasized that in the long-term plan, what will happen after 10, 20 and 30 years? All people want to eat better, live better and live better, so the demand for mineral resources is definitely on the rise.

We have been engaged in long-term exploration projects, and we also hope to find more projects, such as potash, or minerals used in nuclear power. We mainly need to look at which mineral products in the future will most need, and we will spend some time doing exploration work in this area.

When looking for specific projects, our aim is to find projects that are long-lived, low-cost, and that can be expanded in the future. We want to make sure that our assets are cheap and efficient, which is why we are very concerned about the quality of the project itself when selecting projects, so that all our assets can remain profitable at different stages of the economic cycle. .

Mining projects have some differences from other projects. The investment cycle of mining projects is very long. Basically, each project needs more than five years of production. Therefore, it is necessary to ensure that the project cost is very low and there is a healthy cash flow. This is why we continue to expand the iron ore business because we see that the demand for iron ore in the future is still very strong.

Smoothing cycle

"21st Century": The market is very concerned about the development of the Ximandudu iron ore, because this is the largest joint venture between Rio Tinto and Chinese companies so far. What progress has been made so far?

Aibo Nian: In April of this year, we signed a related agreement with the Guinean government. Since then, we have devoted a lot of manpower and material resources on the spot to enable this project to move forward quickly. In the past few months, we have spent a lot of energy in engineering and geological surveys. This project has many technical and logistics needs. We are looking for the best infrastructure addresses and solutions.

In the coming months, we must determine the infrastructure implementation plan, such as the transportation plan. This project will build a railway of about 650 kilometers and also determine the site selection plan for the port. In addition, we have also made great efforts in hiring local employees and looking for infrastructure construction companies. All these efforts are to make the Simandu Project as forward as possible and produce the first products as soon as possible.

"21st Century": Simandou plans to produce the first batch of iron ore by mid-2015, and industry giants such as Baosteel and Vale forecast that the supply and demand of iron ore will usher in an inflection point in 2015. If the demand for iron ore comes short by that time, Will Simandou’s economic value be affected?

Abena: Rio Tinto's engineering power is much stronger than our ability to predict future prices. We hope that the business will be flexible enough to actively respond to difficult times and welcome good times.

The basic product prices mainly look at the dynamic changes in the supply and demand sides. If we look back at the changes in supply and demand over the past 5-10 years, the demand side rapidly declined at the time of the global economic crisis, but after the economy slowly recovered, the demand side's demand was stronger than before the global financial crisis, and demand recovery was also very rapid.

But at the time of the global financial crisis, global investment in new mines actually slowed down, or decreased. In this case, demand will recover quickly, but the rate of supply recovery will be much less than that of demand-side recovery, so it will cause short-term supply shortage, which is why, although the overall economic development trend has slowed down, we Still insist on the reasons for investing heavily in production of products.