Rio CEO sees strong commodities demand for decades

JOHANNESBURG (Reuters) - Mining group Rio Tinto expects buoyant demand for commodities to last for decades, Chief Executive Tom Albanese said on Monday.

"We are looking at a period, probably for several decades, where global consumption of most of what we produce will be at a higher level than it's been for the past several decades," he told an investor presentation.

"And that in itself will be a driver of our industry ... and have the effect of raising equilibrium prices."

Rio again rebuffed an all-share bid proposal from larger rival BHP Billiton on Monday, mapping out its own growth prospects as an independent firm.

As part of the presentation, it released a paper by its Chief Economist Vivek Tulpule, outlining its view of commodity markets going forward, based on rapid economic growth in countries such as China and India.

"The implications for commodity markets are nothing short of profound. Projections for iron ore, aluminium and copper suggest that demand could double and even triple over the next 25 years," Tulpule said.

In the aluminium sector, due to China's reliance on imported bauxite and high power charges, its aluminium output will continue to have high costs, with further impact due to the expected strengthening of its currency.

"The implied increase in the marginal cost of production for alumina and aluminium means that their prices are unlikely to revert to the lower levels implied by historical trends," the paper said.

In copper, strong Chinese demand growth is expected next year while disruptions to supply are likely to continue.

"Prices could remain near current levels as long as production growth continues to under-perform against the underlying demand trend creating a need to ration supplies," Rio said.