The boss of mining giant Rio Tinto on Friday warned that a second wave of coronavirus was inevitable, casting a cloud over the outlook for commodities markets.
Jean-Sebastien Jacques said: “The uncertainty in the marketplace is because there is no doubt — it’s not a question of if, it’s a question of when — we will have a second wave of Covid-19.”
His comments came as Rio Tinto reported a mixed second quarter performance, with strong iron ore and bauxite demand supported by the V-shaped economic recovery in China, the world's biggest raw materials consumer.
Jacques told Bloomberg: “I’m not quite sure on what letter of the alphabet I should pick for the other countries. We are starting to see some signs of recovery in construction and automotive in the U.S. and in Europe, but it is slow.”
The world's second largest miner has seen weakness in the US copper market, while the aluminium sector has been hit by the struggles of the car making industry. Rio is not expecting much in Europe and Japan, where it said recoveries have yet to begin meaningfully and are likely to be subdued when they do get underway.
Supply disruptions caused by Covid-19 lockdowns are still affecting 3% to 4% of the world's annual copper supply, on top of the normal industry disruptions.
The company's copper output fell 3% in the second quarter compared with a year earlier, although Rio's overall production guidance for 2020 remains unchanged across all commodities.
The demand recovery in China meant Rio reported a 1.5% rise in iron ore shipments in the three month period, beating analyst expectations at 86.7 million tonnes. Beijing has bolstered infrastructure spending in the wake of the pandemic, leading to increased demand for the steelmaking ingredient.
Iron ore accounts for about 80% of Rio's underlying earnings.
