Rio says China not enough to sustain industry

OECD economies must recover for the resurgence of international trade and consumer spending needed for miner Rio Tinto and other industries to be on a sustainable footing, its chief executive said on Saturday.

Tom Albanese pointed to the strength of China's economy and said China's growth in 2009 has been a key part of Rio Tinto's success in 2009 and the Asia-Pacific region, but that was not enough for a full-scale global recovery.

"I think though that we have to be very mindful and cautious of the fact that the U.S. economy, the European economies, other OECD economies, with the exception of Australia, have been in negative mode growth this year," he told Reuters on the sidelines of an Asia-Pacific leaders and CEO summit in Singapore.

"And until we see recovery of those economies you will not see the necessary resurgence of international trade and consumer spending that ultimately is necessary to put our industries and other industries on a sustainable footing."

He said he was impressed with the resilience and strength of the economy in Australia, whose mineral wealth has made it an ideal supplier to fuel China's rapid industrial growth.

Australian employment rose in October, a second month of surprisingly strong growth that pushed up the Australian dollar.

"To some extent the Australian dollar reflects that underlying strength of the Australian economy," he said.

However, he said that Australia's planned introduction of a carbon cap-and-trade scheme would hurt the economy. He said Rio, the world's second largest miner and a major coal producer, preferred a common global approach to cutting carbon emissions.

"We do admire the leadership that Australia has taken but I think Australia has to recognise it has now put itself at a competitive disadvantage from a regional perspective, particularly on energy in terms of export industries.

"It will have a negative effect on the Australian economy and on Australian jobs."

Australia is the world's top coal exporter and a big producer of steel, aluminium and liquefied natural gas.

The Australian government hopes the Senate will pass a suite of carbon trade laws by the end of this month. This comes ahead of a global meeting in Copenhagen in December that is aimed at trying to agree a broader climate pact, but hopes for success have dimmed as nations fail to agree on targets and financing.

The Australian scheme faces intense opposition in its Senate, meaning the government might not get the extra seven votes it needs for the laws to pass.

The scheme, if passed, would cover 75 percent of Australia's greenhouse gas emissions from about 1,000 of the most polluting companies or operations.

The scheme will would require polluters to buy a permit for every tonne of carbon they produce. The government has proposed a flat carbon price cap of A$10-a-tonne ($8.34-a-tonne) on start-up. The scheme would move to full auctioning and trading of permits from 2012.

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