Chinese skyscraper builders to put up equivalent of 10 New Yorks, says Rio Tinto

Rio Tinto yesterday shrugged off talk of an impending collapse in the commodities market, pointing to recent research that suggested China will build up to 50,000 skyscrapers in the next 20 years, the equivalent of 10 New Yorks, creating sustained long-term demand for steel and other raw materials.

The mining group reported half-year profits of $5.5bn (£3bn), a 55% increase on the same period a year earlier, providing the company with ammunition in its battle to see off a hostile bid by BHP Billiton valued at about £70bn.

Rio's chairman, Paul Skinner, said the board's view was unchanged since BHP increased its bid in February. "The offer on the table is still short of what we would consider full value for Rio Tinto and its prospects, and these results emphasise that," he said. "We are demonstrating what Rio Tinto is really capable of."

Metal prices have come off their highs after five years of strong growth, but Skinner said the credit crunch had had only a "modest" impact on Rio's markets.

The company said that North America and Europe were becoming decreasingly relevant to the setting of metals prices, as demand is driven by China, India and other emerging markets - Chinese imports of iron ore are running 20% ahead of the same point last year. In the first half of the year, Rio lifted prices of iron ore by an average 86% compared with 2007, even as economies in North America and Europe were weakening. The average copper price charged by Rio in the first half was 20% higher than last year, gold was 38% higher and aluminium prices were up 2%. The company said 2009 was likely to be the sixth successive year of higher prices.

Profits were also boosted by the company's $38.7bn acquisition of aluminium producer Alcan last year, though the brokerage Numis estimated that it accounted for only 5% of the gain in earnings.

Some analysts had been forecasting a dip in Chinese investment after the Olympics, but Rio is predicting that there will be a post-games boom. The company cited research from McKinsey, the management consultancy, which said the scale and pace of urbanisation would continue at an unprecedented rate.

By 2025, the report predicts that China will have 221 cities with more than a million inhabitants, compared with 35 in Europe today. As well as the need for huge spending on infrastructure, McKinsey projects that China will build between 20,000 and 50,000 skyscrapers, many of them in less developed interior provinces far from Beijing and Shanghai.

The company's revenue from China in the first half more than doubled on the previous year, from $2.4bn to $4.9bn. Group revenue topped $30bn.

"There is no question that we are living in an era of unprecedented demand for minerals and metals," said Rio's chief executive, Tom Albanese.

The BHP offer is conditional on it gaining regulatory approval. A merger has already been cleared by Washington, Europe gives its verdict in December and Australian regulators are to rule in October. If it receives clearance, BHP will then send out the offer document and the bid will go live.Another obstacle was thrown in the path of BHP's bid over the weekend when the Australian government gave its approval to the acquisition of a 12% stake in Rio's London shares by the Chinese state-owned company Chinalco.