The medium to long-term outlook for metals demand remains very strong, despite the near-term risks, according to London-based Anglo American’s (LSE: AAL) CEO Cynthia Carroll.

“We are still much closer to the beginning than the end of the developing world growth story,” Carroll said during a speech at the Melbourne Mining Club in London on June 30.

“We have all witnessed the phenomenal growth of demand for commodities over the past 10 years, driven above all by the urbanization and industrialization of China. For the future, there is overwhelming evidence that we should be optimistic rather than pessimistic,” she added.

Short-term risks include the US struggle to overcome the after effects of the financial crisis, Europe stumbling through its sovereign debt crisis and Japan coming to terms with the impact of the massive earthquake and tsunami in March and the ensuing nuclear power emergency.

PREPARING FOR DEMAND GROWTH

Opportunities for continued growth in commodities demand are not just confined to the developing world and its efforts towards infrastructure development, according to Carroll.

“Let’s take the US as an example. We tend to be skeptical about the American prospects and there are certainly significant short-term issues. But, in the longer term, the US’ continuing population growth – with a growth rate set to overtake China’s in this decade – combined with the recent collapse in construction activity mean that the country will face a severe housing shortage,” Carroll said.

Filling this shortage and delivering US President Barack Obama’s ambitious infrastructure plans will create strong US-driven commodity demand too, according to the CEO.

The main issue for the mining sector is not whether demand will grow but how to increase supply to meet consumption growth.

“The critical question is how we will ensure that commodity supply is there to meet that demand,” Carroll said, adding that mining companies and governments all over the world need to work together in a new partnership, acknowledging the long-term nature of the mining industry and resisting short-term pressures.

“[Politicians] have the temptation to court short-term popularity. And they have a consistent tendency to concentrate on mining only during the industry’s good times and not when times are tough… But mining companies themselves often have the temptation to respond to short-term pressures from financial markets,” Carroll said.

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