Rio Tinto Says Mongolia Underground Copper Mine to Take Longer, Cost More
July 15 2019 - 6:14PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY--Rio Tinto PLC (RIO.LN) said construction of its
underground copper mine at Oyu Tolgoi in Mongolia will take longer
and cost more than earlier envisaged.
The miner said Tuesday it is assessing mine design options given
stability risks associated with its approved design, which could
delay production by 16-30 months to between May 2022 and June
2023.
Rio Tinto estimated the capital spend for the project could now
be as high as US$6.5 billion-US$7.2 billion, an increase of up to
US$1.9 billion from the US$5.3 billion projected earlier.
The company said it is reviewing the carrying value of the Oyu
Tolgoi mine and would disclose the outcome on August 1.
Rio Tinto separately said it shipped less iron ore from its
Australian hub last quarter because of operational setbacks.
The miner, one of the world's top exporters of the steel
ingredient, reported iron-ore shipments from its Pilbara operations
of 85.4 million metric tons for the three months through June. That
was down 3% on the same period a year earlier.
Rio Tinto last month downgraded its full-year projection for
Pilbara iron ore shipments to 320-330 million tons, from an earlier
forecast of 333-343 million tons, citing setbacks in the Greater
Brockman hub especially. That follows disruptions earlier in 2019
from a cyclone and a fire at a key port.
The weaker outlook means unit costs are likely to be
higher-than-anticipated in 2019, the company said Tuesday.
Still, Rio Tinto is benefiting from bumper prices for the
commodity, which have rallied more than 60% this year to a
five-and-a-half-year high, aided by production cuts from Brazil's
Vale SA. Vale, which was forced to curb output following a deadly
dam disaster in January, and Rio Tinto have historically been the
top two shippers of iron ore globally.
Earlier this year, Rio Tinto said it was closely monitoring
mining disruptions in Brazil to determine whether it should
accelerate any projects to increase its own production, and should
have a clearer idea by the end of this year. Although, the
Anglo-Australian miner said it is more leveraged to, and
consequently focused on, market prices versus its production
volumes.
Rio Tinto also reported a 13% on-year fall in quarterly mined
copper production because of weaker grades at Escondida and
Kennecott.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
July 15, 2019 18:59 ET (22:59 GMT)
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