15th December 2015
Tom Albanese was CEO of Rio Tinto between 2007 and 2013, having been at the company since 1993. Since 2014 he has served the position of the CEO of Vedanta Resources.
Q: What is your current outlook on India? Do you think that India can compete against China?
A: My outlook for India is continued GDP growth averaging 7% or more per year, for the next ten years or so. This GDP growth will lead to a doubling of the Indian economy sometime between 2025 and 2030, and will lead to more urbanisation. It will require more infrastructure, and will certainly put a strain on all of the services, both at a state and on a central political level. In my view, India will not follow the same path of development as China. First and foremost, because it does not have the solidarity of the Chinese Communist Party, and the control and determination that comes with that central party. The democratic institution itself will lead to less control from the centre as India continues to grow. India’s growth will, in my view, be consumption led, whereas China’s growth was investment led. In India, people will begin to consume first. They will begin to construct buildings, and then the government will scramble to add roads, whereas in China, they built the roads first, and then everyone followed with buildings. Because India is a democracy, and because you have the power of the vote which acts as a release valve for poor people who may be dissatisfied, the Indian government will not be as concerned as the Chinese Communist Party has been regarding revolts from large masses of the poor. So India’s economy will not need to lift all boats in the same fashion that we saw over the past ten years in China. That means you’ll see again a lower level of overall urbanisation, and a lower intensity of infrastructure development between the two countries. India will always take a different path of development to China. India will not have the same speed of growth, and it may never grow as large as the Chinese economy. However, it will probably be more resilient, although possibly also more chaotic, in that the nature of democracy means that governments will change. You will see policies change abruptly as governments and political parties change, but you have less risk of the kind of social destabilisation that China’s history has seen from time to time, when large masses of their population became dissatisfied.
Q: Are there any other developing countries which you are optimistic about at the moment?
A: I’m optimistic about many of the developing nations in south-east Asia where you have, like India, a youthful population who have energy and want to live better. But I would also say on a case-by-case basis you can see emerging stars in Africa, in those countries where the governance is good, and they are receptive to foreign direct investment which can help them develop their infrastructure, and potentially lead them in the future to be low cost manufacturing centres, ie the next Bangladesh.
Q: How long do you think the downturn in mining will last for?
A: In many ways this downturn is as bad as the downturn we saw in 2009. However, in 2009, the entire global economy was in shambles, whereas now the general global economy outside the commodities sector is in good shape. There’s good news and bad news from that: the good news is that we don’t need to worry about the world’s economy falling off a cliff, which was very much the case in 2009. The bad news is that as a consequence of not having to worry about the world’s economy falling off a cliff, governments do not have to force upon themselves the same type of aggressive fiscal and monetary stimulus, so you won’t see that spurt of demand which will take the current surplus we see in most of the mining sectors, and turn them into deficits.
Q: Are there any specific commodities which are you most positive about?
A: I think that you have to look at the individual supply and demand characteristics of the different metals and commodities to take a view. Based upon that, I would be most optimistic in the next 12-18 months about the prospects for zinc, as many of the world’s largest mines are exhausting as we speak. I’m probably least optimistic about the prospects for aluminium, because the Chinese continue to develop new aluminium capacities, and although aluminium demand is strong globally, the supply seems to keep growing in excess of that demand growth. I would put copper, iron ore, and oil somewhere in the middle of those extremes.
Q: If you were looking to start your career today as a 16 year old, would you still go into mining?
A: When I was your age, I wasn’t thinking about what career I wanted to go into. I wanted to go to Alaska. So I packed a duffel bag of camping and climbing gear, and went to Alaska. My love of the outdoors led me to geology, which led me to start working for mining companies, which got me into the mining business. I think my message to a student of your age would be to find out what you’re interested in doing, find out what you’re passionate about, find out where your passion can lead to your career path. Don’t plan it too hard, but make sure that whatever you do, you enjoy it, because that way you’re more likely to do well, you’re more likely to learn harder, and you’re more likely to show enthusiasm to those around you. For young leaders, it’s those who show enthusiasm for what they do that generally get picked out by their bosses for the next big role.
Q: What life lessons have you learnt over the course of your distinguished career?
A: Most of the time it’s been good news: it’s been about working hard and it’s about inspiring others and always being part of a team, rather than being an individual. Occasionally, in anyone’s career you have periods of uncertainty or setbacks, and it’s critical for someone anticipating that they’ll be successful over 40 years of a career to be ready to persevere, to have a thick skin, and to be able to see through those valleys that are inevitable in a career cycle. Stay an optimist.
Q: What did you learn during your teenage years which you think has influenced your success?
A: You’re going to be surprised by this, but the one class in high school which I most remember helping me get where I am now, aside from the core curriculum, was when I took typing. In those days, people didn’t learn to speed type unless you were going to be a secretary. Now in the world of computers, everyone has to speed type. On the more serious side, I would say that I found the sciences and maths were what I always did best at in high school. I made this discovery because of the broad range of subjects you had to do at US high schools and universities, and I’d say that if someone has the chance to take a broad curriculum, that is well served.
Q: Is there anything else you wish you had done during your teenage years that you didn’t do?
A: I never went to rock concerts. I was working too hard.
Q: Who is the most interesting person that you’ve met, and why?
A: I have had the privilege of meeting many corporate leaders and many heads of states, people who are distinguished during their lifetime and after their lifetime. I would say that the ones I have been most impressed with were those who reminded themselves and others all the time that they’re still human, and they’re still individuals. This taught me that humility and being humble generates the greatest mutual respect and admiration.