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UPDATE 1-Rio Tinto CEO a non-believer in commodities rebound

Published 2016-05-05, 01:16 a/m
© Reuters.  UPDATE 1-Rio Tinto CEO a non-believer in commodities rebound
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* Rio yet to see light in commodities markets
* CEO Walsh says forecasting a recovery "brave call"
* Rio not actively on M&A trail

(Recasts, adds comments from CEO Walsh, other details)
By James Regan and Sonali Paul
SYDNEY/MELBOURNE, May 5 (Reuters) - Mining giant Rio Tinto
RIO.AX RIO.L is not counting on an upturn in commodities
markets anytime soon despite recent gains in prices of iron ore,
its main source of revenue, as much of the world's economies
continue to underperform.
Chief Executive Sam Walsh said factors such as the looming
U.S. election, a softer outlook in China and immigration woes
facing Europe were suppressing a recovery in commodities. His
view, however, is a departure from others calling for an end
soon to the commodities rout that has sent just about every
major mining company into the red.
"I believe in that environment, calling the bottom is a
brave move," Chief Executive Sam Walsh told reporters.
Walsh, who will be replaced by Jean-Sebastien Jacques as CEO
in early July, also doused speculation that Rio Tinto was coiled
to pounce on assets put on the block by rivals suffering more
from the downturn. "There are just simply not assets that we
might be interested in," he said on Thursday.
The 143-year-old company has typically avoided the oil
business and has also made it clear its days of expanding in
iron ore are coming to a close.
Rio Tinto has been cited as an interested party if Freeport
McMoran's FCX.N Grasberg copper mine becomes available.
"I'm not holding my breath and I suspect that JS won't hold
his breath unless somebody puts their crown jewels on the table,
and my instinct is that'll be the last thing they do," Walsh
said, referring to the incoming CEO.
The operating environment remains "tough out there" with
heightened volatility in markets, made worse by widespread
speculative trading in metals futures in China, Walsh told
reporters after Rio Tinto's annual general meeting in Australia.
He added that Rio Tinto was looking to eliminate a further
$2 billion in costs over the next two years.
Iron ore prices .IO62-CNI=SI are up about 43 percent this
year, after falling by close to 40 percent in 2015. IRONORE/
Nev Power, the CEO of Australian iron ore miner Fortescue
Metals Group, is betting on prices stabilising in the months
ahead as supply and demand come into balance.
Rio Tinto, which runs the world's No.2 iron ore business and
is also a force in aluminium, copper, coal and dozens more
commodities, has run into troubled waters with the toughest
mining downturn in decades. It slumped to a net loss in 2015.

(Editing by Himani Sarkar)

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