RPT-What slowdown? Aussie miners not worried about China growth

By Manolo Serapio Jr.

KALGOORLIE, Australia, Aug 2 (Reuters) - Australian miners at an annual Outback meeting this week are not worried about slower growth in key buyer China, convinced Beijing's appetite for everything from iron ore to coal remains strong.

Efforts by China to shift to a more sustainable pace of economic expansion and cool a red-hot property market had raised worries demand of the world's top consumer of many industrial metals may slow for the rest of the year, possibly restraining output and trapping prices in narrow ranges.

'The economy of China has free cash today in excess of $5 trillion and that's an economic powerhouse that just keeps on going for a long, long time,' Gavin Thomas, managing director and chief executive of Australian miner Kingsgate Consolidated , told Reuters on the sidelines of the three-day Diggers and Dealers mining conference in Western Australia on Monday.

'We see China growing maybe at volatile rates, but they will still need commodities. They're still building a Manhattan once a year, okay, they make three quarters of Manhattan.'

Data earlier on Monday showed Chinese manufacturing shrank in July for the first time since the global downturn in March 2009 as government steps to slow bank lending and fight property speculation hit home.

That followed data last week showing profits at China's large-scale steel companies falling nearly 38 percent in June from a year ago on slower demand, further evidence of efforts by Chinese authorities to curb real estate overheating.

But a sharp decline in Chinese demand for example, for iron ore, remains to be seen. China buys about half of its needs of the steel-making raw material from Australia.

'We have significant reliance on the Chinese economy, so any kind of slowing will affect us, but to what end is uncertain,' said James Wilson, resource analyst at DJ Carmichael.

'But it couldn't be that material such that we will be worried about it at this stage.

'The Chinese economy is still coming very strongly, but there's also a concern of how strong it can be and how long that can be maintained before it runs into exhaustion,' he added.



INSATIABLE DEMAND

Still, global miners BHP Billiton and Rio Tinto have both warned that potentially slower demand from China would continue to weaken sentiment and fuel more volatility in commodity markets.

China's annual economic expansion moderated to 10.3 percent in the second quarter from 11.9 percent in January-March, a slowdown likely to extend over the rest of the year as Beijing steers monetary and fiscal policy back to normal after a record credit surge to counter the global crisis.

While the slowdown may be due to seasonally weak demand from the manufacturing sector, some analysts say it could also be because of thinner appetite from China's construction sector.

'Even if they stay where they are, China still has a very high level of growth, and it's all going to be good for us,' said Chris Reed, managing director at diversified miner Reed Resources .

'We can't produce enough gold to satisfy the world's demand today and that is my view of many other commodities, look at copper, we just can't find enough to meet this insatiable demand,' added Kingsgate's Thomas.

(Reporting by Manolo Serapio Jr.; Editing by Ed Lane)

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