Rio Tinto Group, the world's third- largest mining company, said demand for commodities from copper to iron ore is robust and supply growth still trails consumption.

"There's been volatility in recent weeks, but we're still looking at very strong prices," Leigh Clifford, Chief Executive Officer of the London-based company, said in an interview today. "The important thing is that demand remains strong in the key economies around the world."

Copper prices fell in London today, extending losses to 18 percent from their record a month ago. Copper, gold, silver and other commodities have tumbled on concern rising interest rates will slow global economic growth. Central banks from Asia to Europe are boosting interest rates to curb rising prices.

"There's some concern about inflation, but the fundamentals remain strong," Clifford said in Singapore.

Prices of copper, used in electrical cables and wires, are still double the average last year of $1.60 to $1.70 a pound, he said. "These are buoyant times for the metal industry."

Robin Bhar, London-based analyst with UBS AG, Europe's largest bank, agreed with Clifford.

"We've got to appreciate that a tight market is an industrywide factor," he said today.
China demand

China's demand for metals remains strong, even after the government raised borrowing costs and announced lending curbs to slow investment, Clifford said. The country's share of Rio Tinto's sales could increase toward 20 percent this year, up from 15 percent last year.

The nation is still undergoing "very strong economic growth," said Clifford, who met Chinese Premier Wen Jiabao during his visit to Australia in April. "Here we are really seeing a global superpower industrializing."

China is the world's biggest user of copper, aluminium, zinc, nickel and steel.

Miners are plagued by disruptions, as well as labor and equipment shortages, and they are struggling to find new large deposits, Clifford said.

"Most companies are finding it harder to bring on new capacity and I think we'll see that continue for some time," he said. No new major copper mines are "coming down the pipe."

Copper output in Chile, the world's biggest producer, fell 1.4 percent in March from a year earlier. Grupo Mexico SA, the world's seventh-biggest copper producer, shut its La Caridad mine on June 8 because it couldn't end a strike.
Long-term prices

Clifford wouldn't comment on when he thinks global copper supply would match demand. Still, he said long-term prices should be "a lot less than $3.50 a pound."

"We are a cyclical industry and eventually prices will return from these sorts of high levels," he said. "I think it might be a little bit longer than we anticipated in the past."

Copper for delivery in July traded at $3.3130 a pound on the Comex division of the New York Mercantile Exchange at 9:06 p.m. Singapore time today.

The National Mining Society, representing Chile's largest mining companies, said this month that prices for the metal would average $2.80 to $3.00 a pound this year, higher than a January forecast of as much as $1.75 a pound.