Archive | Rio Tinto

Rio Tinto CEO calls for ‘United Nations of the mining world’ – by Barbara Lewis (Reuters U.S. – May 15, 2018)

LONDON (Reuters) – Rio Tinto (RIO.L) (RIO.AX) CEO Jean-Sebastien Jacques said resource companies needed to build “the United Nations of the mining industry” to tackle rising resource nationalism and cost inflation.

Rising commodity prices typically lead to resource nationalism as they inspire resource-holding nations to demand higher shares of international mining companies’ profits.

At the same time, the miners say increased energy prices and wage demands are driving cost-inflation and eroding profit margins. They also say their profits required years of investment throughout the commodities cycle and their projects provide jobs and tax revenues for host nations. Continue Reading →

Rio Tinto warns of threat from rising costs and resource nationalism – by Neil Hume (Financial Times – May 15, 2018)

The head of Rio Tinto has issued a stark warning to the mining industry, saying it will have to work hard to protect margins and generate cash against a backdrop of rising costs and increased political risk.

Rio chief executive Jean Sebastien-Jacques said cost inflation driven by near $80-a-barrel oil was affecting the entire sector and all commodities, while resource nationalism was gaining momentum.

“The outlook for global growth remains positive — but there are some significant risks. Volatility in markets . . . trade wars and resource nationalism are all sources of uncertainty,” Mr Jacques told investors at the Bank of America Merrill Lynch conference in Miami. Continue Reading →

Rio Tinto Tax Evasion Allegations Shouldn’t Scare Canadian Firms – by Peter Menyasz (Bloomberg News – May 7, 2018)

Companies shouldn’t be afraid to conduct legal tax planning, despite tax evasion allegations against a Canadian Rio Tinto subsidiary, practitioners said.

Vancouver-based Turquoise Hill Resources Ltd. allegedly avoided as much as $470 million in taxes on its copper and gold mine in Mongolia, according to a watchdog group. But the company insists it is in compliance with Canadian law.

The discrepancy highlights the complex nature of interpreting tax law, which varies widely across countries, practitioners said. And tax avoidance is a major focus for countries, particularly as they look at how to treat multinational tech firms. Continue Reading →

Rio Tinto’s climate change resolution marks a significant shift in investor culture – by Anita Foerster and Jacqueline Peel (The Conversation – May 2, 2018)

What does the advocacy group the Australian Centre for Corporate Responsibility (ACCR) have in common with the Local Government Super fund, the Church of England Pensions Board, and the Seventh Swedish National Pension Fund?

Quite a lot, it seems. These three institutional investors joined with the ACCR to co-file a shareholder resolution on climate change at mining giant Rio Tinto’s Australian annual general meeting in Melbourne yesterday. While Rio’s board advised shareholders to vote against the resolution, there was a very healthy showing of 18.3% shareholders voting in support (over 20% including abstentions).

The resolution called on Rio to review and comprehensively report on its membership of industry associations such as the Minerals Council of Australia (MCA). The MCA’s pro-coal political lobbying has been distinctly at odds with the position of companies such as Rio, which publicly support measures to reduce carbon emissions in line with the Paris climate agreement. Continue Reading →

Rio Tinto pays $US5.1bn in taxes and royalties – by Ewen Hosie (Australian Mining – April 10, 2018)

Rio Tinto has released information pertaining to its taxes and royalties paid in 2017. The company paid $US5.1 billion ($6.6 billion) in all, with a notable majority of $US3.8 billion going towards Australian taxes.

Due to how Rio’s payment structure is set up, the company expects to pay an additional Australian tax instalment of $US1.2 billion in June 2018 for the 2017 calendar year. Over half of the company’s resources are in Australia.

Other countries where the operator paid significant taxes include Canada at $US387 million, Chile at $US318 million, Mongolia at $US228 million, South Africa at $US93 million, the United Kingdom at $US81 million, United States at $US78 million and Guinea at $US45 million. Continue Reading →

Rio Tinto’s Mongolian comfort zone is shaken – by Matthew Stevens (Australian Financial Review – April 9, 2018)

Confirmation that Mongolia’s anti-corruption authority has opened an “investigation” of the historic 2015 $US4.4 billion project financing deal for the Oyu Tolgoi copper mine has sucked Rio Tinto into the vortex of a controversy that started with a Swiss investigation into the contents of a bank account connected to a former Mongolian finance minister.

Ever since it became clear last month that Swiss authorities were taking serious interest in Bayartsogt Sangajav and how he came to fill a Swiss bank account with $US10 million back in September 2008, Rio has been able to take public comfort in the fact that whatever the circumstances were, they occurred at a time before the multinational miner had the capacity to influence negotiations between the government of Mongolia and Oyu Tolgoi’s Canadian-listed developer, Ivanhoe Mines.

At the time the claimed payment was made, Rio owned about 10 per cent of Ivanhoe. The Anglo-Australia stepped its way to control by 2012 and, to announce the changed circumstances, it changed Ivanhoe’s name to Turquoise Hill. Continue Reading →

Rio Tinto’s Coal Canary Stops Tweeting – by David Fickling (Bloomberg News – March 28, 2018)

Prices at Australia’s Newcastle port, the largest export harbor for the thermal coal used in power generation, have held above $90 a metric ton for eight months, the best run since the market peaked between 2010 and 2012, only dropping below that level this week.

Glencore Plc’s energy business — essentially a coal-mining operation with a droplet of oil thrown in 1 — generated as much profit in 2017 as in the previous three years put together, and accounted for a quarter of group earnings. This month is one of the dozen best for coal deal-making activity since the start of 2006, data compiled by Bloomberg show.

That could make Rio Tinto Group’s decision to exit the last of its coal mines seem quixotic at best. While the sales of its Kestrel and Hail Creek mines and Valeria and Winchester South projects will generate about $4.15 billion (enough on paper to leave Rio debt-free), they’ll make it an increasingly iron ore-dependent business. Continue Reading →

Rio Sees $5 Billion Copper Expansion on Track Amid Probe – by David Stringer and Tom Mackenzie (Bloomberg News – March 26, 2018)

Rio Tinto Group has yet to be contacted by Swiss authorities over a bribery investigation related to Mongolia’s giant Oyu Tolgoi copper and gold mine and the site’s $5.3 billion expansion remains on track, according to the producer’s top executive.

The attorney general of Switzerland is examining whether the world’s second-biggest mining company paid bribes in the development of the project, the Office of the Attorney General said last week by email. The office also opened criminal proceedings against a former Mongolian finance minister on suspicion of bribery and money laundering, it said.

London-based Rio, its Turquoise Hill Resources Ltd. unit and other partners are advancing an expansion aimed at more than doubling output at Oyu Tolgoi, targeting an eventual rate of more than 500,000 metric tons of copper a year. Continue Reading →

Glencore snaps up Rio Tinto’s Hail Creek coal mine, project for $1.7 billion – by Tom Westbrook (Reuters U.S. – March 20, 2018)

SYDNEY (Reuters) – Glencore is buying Rio Tinto’s Hail Creek coal mine and the Valeria coal project in Australia for $1.7 billion, tightening the Swiss trading and mining giant’s grip on coal as its rivals exit the industry.

The acquisition, announced by both companies on Tuesday, follows Glencore’s purchase of half of Rio Tinto’s Hunter Valley coal operations, also in Australia, for $1.1 billion last year in a deal with China’s Yancoal Australia Ltd.

Glencore is already the world’s biggest exporter of thermal coal used for power stations, and Hail Creek will give it a bigger stake in metallurgical coal used for steelmaking. Continue Reading →

As copper booms, miners take hunt to Mongolian dunes – by Barbara Lewis (Reuters U.S. – March 13, 2018)

LONDON (Reuters) – When temperatures rise and winds drop in the coming weeks, a band of explorers will hunt for copper riches in Mongolia’s Gobi Desert. For years Rio Tinto has been the sole international copper mine operator in Mongolia, bound closely to a country where it has bet billions of dollars on the giant Oyu Tolgoi project.

Others have steered clear due to the risks of operating in a nation with an unpredictable and young democracy and judiciary, a frail economy and extreme weather.

Now rising global demand for a metal used in electric cars and renewable energy, at a time of increased costs and depleted deposits in the world’s biggest copper producer Chile, is driving miners to riskier locations. Continue Reading →

Rio Tinto’s last two coal mines set to attract bids over $2.5 billion – by Sonali Paul and Clara Denina (Reuters U.S. – March 9, 2018)

MELBOURNE/LONDON (Reuters) – At least three bidders are expected to submit final offers for global miner Rio Tinto’s (RIO.AX)(RIO.L) Hail Creek and Kestrel coal mines in Australia, which could fetch up to $2.5 billion, people familiar with the process said.

The Anglo-Australian mining company made a strategic decision in 2017 to exit coal and focus on growth in iron ore, copper and its aluminum division. Hail Creek and Kestrel are Rio Tinto’s last two coal mines, following the $2.7 billion sale of its Hunter Valley coal operations in Australia to Yancoal last year.

Australia’s Whitehaven Coal (WHC.AX) is expected to bid, as well as Australian private equity firm EMR Capital along with Indonesia’s Adaro Energy (ADRO.JK). A consortium led by U.S. private equity firm Apollo Global Management (APO.N) is also expected to be in the running. Continue Reading →

Rio Tinto says US tariffs terrible for world trade but no threat to iron ore – by Brad Thompson (Australian Financial Review – March 7, 2018)

One of Rio Tinto’s most senior executives has warned that the last thing the world needs is a trade war sparked by the Trump administration’s protectionism.

Rio Tinto iron ore chief executive Chris Salisbury said the threat by US President Donald Trump to impose tariffs on steel and aluminium imports raised the prospect of a destabilising trade conflict.

“As a mining company we rely on free flow of trade around the world,” he said. “We don’t get a choice in where the resources are and we need to get those resources to our customers, so anything that impedes that obviously does concern us.” Continue Reading →

Australia watchdog takes Rio Tinto, executives to court over Mozambique deal – by Sonali Paul (Reuters U.S. – March 2, 2018)

MELBOURNE (Reuters) – Australia’s corporate watchdog said on Friday it has launched court action against miner Rio Tinto (RIO.AX)(RIO.L) and two former executives for misleading investors about the coal reserves it reported in a $4 billion acquisition in Mozambique.

The Australian Securities and Investments Commission said the company, its former Chief Executive Tom Albanese and former Chief Financial Officer Guy Elliott had made deceptive statements in their 2011 annual report, published in 2012.

“ASIC alleges that RTL (Rio Tinto Ltd) engaged in misleading or deceptive conduct by publishing statements in the 2011 annual report, signed by Mr Albanese and Mr Elliott, misrepresenting the reserves and resources of RTCM (Rio Tinto Coal Mozambique),” the commission said in a statement. Continue Reading →

Iron ore grade war boosts Vale as Evy Hambro exits Fortescue – by Peter Ker(Australian Financial Review – February 28, 2018)

Australian iron ore exporters’ geographic advantage over South American rivals has been largely eroded by China’s growing preference for higher grade iron ore, according to the giant Brazilian miner that stands to benefit most from the trend.

Vale’s claim to now be matching the profit margins on each tonne of iron ore sold to China by the likes of Rio Tinto and BHP comes as Evy Hambro’s BlackRock World Mining Trust confirmed that it had exited Fortescue Metals Group’s share register because of the wider price discounts being applied to Fortescue’s iron ore

The average iron content of Vale’s ore has recently risen to 64.3 per cent with the introduction of the high-grade S11D mine in Brazil’s Carajas region, and the arrival of that mine has coincided with Chinese steel mills paying a premium for higher grade iron ore as they seek to improve environmental efficiency. Continue Reading →

COLUMN-For coal miners, it’s time to exit or get rich – by Clyde Russell (Reuters U.S. – February 25, 2018)

LAUNCESTON, Australia, Feb 26 – It seems coal miners are adopting one of two disparate strategies, either exit the business in a highly visible way to buff up your climate credentials, or sit tight, keep as quiet as possible and rake in the cash.

An example of the public exit from the business is South32 , the Perth-based miner spun out of BHP Billiton which is in the process of selling out of its thermal coal assets in South Africa.

Mike Fraser, South32’s president and chief operating office for South Africa, told Reuters earlier this month that the company was aiming to sell its coal assets because it “did not believe in the commodity.” It would also be better if the coal mines were majority-owned by black investors, Fraser said. Continue Reading →