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Rio Tinto

Rio Tinto looks to cut costs before selling aluminium business – by Angela Macdonald-Smith and Michael Hobbs (Sydney Morning Herald – December 4, 2013)

http://www.smh.com.au/

Rio Tinto chief executive Sam Walsh has signalled he will take more costs out of the aluminium business before any potential spinoff, after taking what he says was ”one of the hardest decisions of my life” to close the loss-making Gove alumina refinery in Arnhem Land.

Mr Walsh said the focus for Rio’s reintegrated aluminium division, as for energy, diamonds and industrial minerals, was on ”improving the business, reducing the cost, running it for cash, taking advantage of the capital that is already invested”.

The aluminium unit delivered $US450 million of Rio’s $US1.8 billion savings in operating costs in the 10 months to October 2013, with $US1 billion in cuts targeted by the end of 2014.

In August the miner scrapped a plan to spin off the Pacific Aluminium business housing some of its Australian and New Zealand assets after failing to find a buyer, and decided to reintegrate it back into Rio Tinto Alcan. The move sparked speculation Rio may look to offload all of Alcan, but Mr Walsh’s comments show more work is first needed on eliminating costs.

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Rio Tinto to cut capital spending on aluminum, coal – by Eric Reguly (Globe and Mail – December 4, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Rio Tinto, the mining giant that owns Montreal’s Alcan, provided more evidence that the era of massive spending on huge projects and acquisitions is over by pledging to shave billions of dollars off its capital spending budget.

The new era will see the Anglo-Australian miner focus on shareholder returns in an attempt to repair some of the damage triggered by years of overspending during the boom years, in the mistaken belief that strong global growth would propel commodity prices ever higher.

Rio CEO Sam Walsh on Tuesday said the company, the world’s second largest miner, after BHP Billiton, would cut capital spending by at least 20 per cent in each of the next two years. That means spending would fall to $11-billion (U.S.) in 2014 from $14-billion this year, and to $8-billion in 2015.

Speaking at investor conference in Sydney, Mr. Walsh said “We lost our way…We are taking decisive action. Don’t get me wrong, we have more to do.”

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Rio Tinto to Halve Capital Spending by 2015 in Focus on Cash – by Elisabeth Behrmann (Bloomberg News – December 3, 2013)

http://www.bloomberg.com/

Rio Tinto Group (RIO), the world’s second-biggest mining company, will cut capital spending to about $8 billion in 2015, less than half its outlay last year, as mineral producers conserve cash after prices fell.

“Our capex is reducing, and will come down further,” Sam Walsh, chief executive officer of London-based Rio, said today in a statement. “From where I stand, we continue to see market fragility and volatility.”

Rio’s cutback underlines efforts by the world’s largest mining companies to rein in spending as a decade-long boom in metal prices wanes. Vale SA (VALE5), the biggest iron ore producer, yesterday slashed its investment budget for a third straight year to $14.8 billion, the lowest since 2010.

“It’s quite a substantial drop and it does suggest that right now Sam Walsh is concentrated very, very hard on affordability,” Evan Lucas, a Melbourne-based markets strategist at IG Ltd., said by phone.

Rio fell 0.6 percent to A$65.49 at the close in Sydney. BHP Billiton Ltd., the world’s biggest mining company, declined 1.2 percent.

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NEWS RELEASE: Rio Tinto unveils breakthrough pathway for iron ore expansion in Australia

28 November 2013

Rio Tinto has set out its breakthrough plan to optimise the growth of its world-class iron ore business in Western Australia. Mine production capacity will rapidly increase towards 360 million tonnes a year (Mt/a) at a significantly lower capital cost per tonne than originally planned.

A series of low-cost brownfield expansions will bring on early tonnes to feed the expanded infrastructure currently being developed. From a base run rate of 290Mt/a by the end of first half 2014, mine production capacity will increase by more than 60 million tonnes a year between 2014 and 2017. The majority of the low-cost growth will be delivered in the next two years with mine production of more than 330 million tonnes in 2015.

This will be achieved primarily through a combination of expanding production at existing mines and securing further low-cost productivity gains, such as those delivered by Rio Tinto’s pioneering Mine of the Future™ programme, together with the proposed future development of the greenfield Silvergrass mine. Work continues on various further expansion options to optimise the next stage of the 360 programme.

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UPDATE 1-Rio Tinto to halt production at Gove alumina refinery (Reuters India – November 29, 2013)

http://in.reuters.com/

SYDNEY, Nov 29 (Reuters) – Miner Rio Tinto said on Friday it will stop alumina production at its Gove refinery in Australia, as the plant is no longer viable amid difficult market conditions.

Rio said it will start winding down production in the first quarter of 2014 and will continue the phase-out during the year. The process would take “some time”, it said.

The announcement was expected after Rio said earlier this week it had decided not to convert the Gove plant to use gas-fired power. The refinery, which employs 1,400 workers, is part of the Pacific Aluminium business that Rio tried to sell, but then reintegrated into its business in August.

The decision comes a day after the mining giant unveiled plans to increase its iron ore capacity towards 360 million tonnes by 2017, cutting costs by $3 billion by not digging new mines and slowing the expansion by about two years.

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Rio Tinto losing $30m a year from Arnhem Land refinery – by Dennis Shanahan (The Australian – November 27, 2013)

http://www.theaustralian.com.au/

RIO Tinto’s decision not to switch its alumina refinery at Gove to cheaper gas supplies has sealed the fate of the plant, which employs 1500 and keeps the Northern Territory’s fourth-largest town of Nulunbuy alive.

The international mining giant confirmed yesterday that it was “reviewing the status” of the refinery in Arnhem Land, which employs hundreds of indigenous workers.

The Rio board is expected to make a decision this week on winding down the refinery operations and instead to export bauxite from the Gove mine on the Gulf of Carpentaria.

Rio Tinto is losing $30 million a year from the refinery and the Northern Territory and commonwealth governments had hoped an offer of subsidised gas to replace high-cost fuel oil to make alumina would keep the refinery open.

Yesterday, Northern Territory Chief Minister Adam Giles said he hoped Rio Tinto would keep the refinery open but the issue was “no longer about gas” for Gove.

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Rio Tinto in Mozambique withdraws expatriate families over safety – by Manuel Mucari (Reuters U.K. – November 1, 2013)

http://uk.reuters.com/

MAPUTO – (Reuters) – Mining company Rio Tinto is withdrawing expatriate employees’ families from Mozambique for their safety in a sign that an upsurge in kidnappings and violence is worrying investors.

Other major companies developing big coal and gas reserves in the former Portuguese colony, Brazil’s Vale, U.S. oil company Anadarko and Italian oil and gas group Eni, said they were closely following political developments there, after clashes between the government army and opposition Renamo guerrillas.

London-listed Rio Tinto, which mines and exports coal from northwest Tete province, said in a statement it was arranging to send home the families of foreign employees.

It announced the move a day after tens of thousands of Mozambicans marched in the capital Maputo and two other cities to protest against the threat of armed conflict and a recent spate of kidnappings by criminals.

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Rio Tinto’s former boss says miners were ‘too slow’ to react – by Clara Ferreira-Marques (Reuters U.S. – October 29, 2013)

http://www.reuters.com/

LONDON – (Reuters) – Mining companies were too slow to respond to changing investor demands from mid-2011 as sentiment deteriorated, failing to spot the wave of change which eventually swept out a generation of executives, the former boss of miner Rio Tinto said on Tuesday.

“We didn’t react fast enough,” said Tom Albanese, chief executive of Rio Tinto (RIO.L) (RIO.AX) until he was ousted in January – one of a string of executives toppled by writedowns at the world’s largest mining firms, as boom-year deals soured.

Recalling Rio’s half-year earnings, released in August 2011, Albanese told an industry gathering that the company had felt at the time that it was announcing positive numbers. Indeed, it reported record cash flow and record profits.

Investors, though, were watching screens “filled with red”, he said, and the mining group’s shares fell. Instead of demanding more growth, investors had begun to feel nervous.

“It felt like panic was setting in… We said this is not us, this is not our problem. We should have said this is us, this is our problem,” the U.S.-born mining veteran said, in one of his first public appearances since his departure from Rio.

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Rio Tinto Makes Hay From a Water Obstacle – by Rhiannon Hoyle (Wall Street Journal – October 29, 2013)

http://online.wsj.com/home-page

In Australia, Miner Seeks Help From Agriculture to Drill Deeper for Iron Ore

KARRATHA, Australia—In one of the driest places on Earth, mining companies like Rio Tinto PLC are grappling with a major water problem: too much of it.

As they deplete easy-to-access deposits of iron ore in Western Australia’s mineral-rich Pilbara region, big miners are spending billions of dollars to drill deeper than ever before, vying to feed Asia’s voracious appetite for raw materials. The latest prize: vast stores of ore that lie below the water table, typically located hundreds of yards beneath the Earth’s surface.

Bringing that ore to the surface would ease fears that the global economic recovery might strain mineral supplies and trigger a sharp rebound in commodity prices, potentially damping global growth.

In the remote Pilbara, which accounts for two-fifths of the world’s iron-ore exports, brisk demand, particularly from China, is creating a challenge for both miners and environmental regulators.

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COLUMN-BHP, Rio Tinto show commodity game has changed – by Clyde Russell (Reuters U.S. – October 23, 2013)

 http://www.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Oct 23 (Reuters) – The latest production reports by Anglo-Australian mining giants BHP Billiton and Rio Tinto show just how much the commodity market has changed in the past year.

BHP and Rio’s quarterly statements underline that mining is now a game of producing the highest volumes at the lowest costs, while at the same time scaling back on spending.

This seems like a logical response to concerns over slowing demand growth from top consumer China, whose appetite for commodities drove a decade-long boom in developing projects to boost supply.

The jury is still out on whether the major resource companies stopped spending in time to avoid a major bust in commodity prices, or whether new supply still in the pipeline will deliver a crashing end to the China-led boom. Certainly both BHP and Rio made much of their efforts to boost volumes at lower costs, while scaling back capital expenditure.

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Rio [Guinea iron ore] rail line will displace 10,000 – by Matt Chambers (The Australian – October 18, 2013)

http://www.theaustralian.com.au/business

RIO Tinto’s $US20 billion ($20.8bn) Simandou iron ore project in Guinea will see more than 10,000 people relocated to make way for a railway to move the raw material to the coast, raising potential issues over who will be responsible for their wellbeing.

The extent of the relocations were revealed yesterday by Rio’s iron ore counsel Philip Edmands in a talk to a resources and energy law association conference.

“We need to move in excess of 10,000 people and there is a patchwork quilt of titles that have to be acquired,” Mr Edmands told the AMPLA conference in Adelaide yesterday.

The complex, 670km multi-user railway to take iron ore from the Simandou concessions, which Rio hopes it will start building in 2018, will include two viaducts, 24km of tunnels and 29 bridges, and is expected to help open up the heavily populated hinterland.

The number of displaced people is larger than many were expecting, given the project’s latest social and environmental impact statement says 15 settlements, with a total of just “270 structures”, would need to be physically moved to make way for the railway.

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Shipments of Rio Tinto’s Mongolia copper stalled by China import snags (Globe and Mail – October 16, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

SYDNEY — Reuters – Global miner Rio Tinto Ltd. could be forced to amass a mountain of copper concentrate at its new $6-billion (U.S.) Oyu Tolgoi mine in Mongolia while Chinese buyers resolve a lengthy customs impasse with their government.

The Oyu Tolgoi concentrator continued to ramp up production in the third quarter and is now operating at maximum processing capacity of 100,000 tonnes of ore a day, said Toronto-listed Turquoise Hill Resources Ltd. of Vancouver, which runs Oyu Tolgoi and is 66 per cent owned by Rio Tinto.

Oyu Tolgoi was supposed to start shipping copper concentrate to China shortly after the mine opened in July. But instead has been forced to stockpile the material while buyers negotiate with Chinese customs officials over import approvals.

“Oyu Tolgoi’s customers are making good progress with Chinese customs officials to resolve matters with purchased concentrate at the border,” Turquoise Hill chief executive officer Kay Priestly said in a statement.

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Australia’s iron ore miners shrug off glut fears – by James Regan (Mineweb.com – October 15, 2013)

http://www.mineweb.com/

Rio Tinto upped annualised output of the steel-making raw material by 20% in October, while BHP Billiton and Fortescue Mining are in the midst of robust expansion work.

SYDNEY (REUTERS) – Australia’s “big three” iron ore miners are set to unveil a boost in third-quarter production and will mine even more in the fourth quarter, ignoring forecasts of a looming supply glut in favour of capturing greater economies of scale.

Rio Tinto this month upped annualised output of the steel-making raw material by 20 percent to 290 million tonnes, while BHP Billiton and Fortescue Mining are in the midst of robust expansion work.

All three already mine ore at costs well below selling prices — thanks to a combination of rich grades and high volumes — and see any dip in prices as simply weeding out less competitive rivals.

Rio Tinto, which is set to post a 3 percent rise in third-quarter output against the previous quarter to 53 million tonnes on Tuesday, is expected to announce a further mine expansion to 360 million tonnes a year by a Dec. 3 meeting with investors.

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Rio Replacing Train Drivers Paid Like U.S. Surgeons – by Elisabeth Behrmann (Bloomberg News – October 3, 2013)

http://www.bloomberg.com/

Train drivers employed by Rio Tinto Group to haul iron ore across Australia’s outback make about the same money as surgeons in the U.S. It’s little wonder the mining company will replace them with robot locomotives.

The 400-plus workers in the remote Pilbara region who earn about A$240,000 ($224,000) a year probably are the highest-paid train drivers in the world, according to U.K.-based transport historian Christian Wolmar. Australia’s decade-long mining boom has sucked up skilled workers, raising wages for engineers to drivers at Rio, the second-largest exporter of the mineral, and its closest competitors, Vale SA (VALE) and BHP Billiton Ltd.

he three companies that control about 59 percent of the $145 billion-a-year global iron ore trade are automating to bolster margins and squeeze out extra capacity as they boost supply to a record to feed steel mills in China, the biggest buyer. The push by Rio (RIO), which aims to move about 290 million metric tons on its rail network by next year, is expected to be the biggest driver for cost cuts in its iron ore unit after currency swings, according to Deutsche Bank AG.

“All producers are chasing better margins and stronger returns,” said Chris Drew, an analyst in Sydney with Royal Bank of Canada.

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Economists duel over benefits of Arizona copper mine – by Mike Sunnucks (Phoenix Business Journal – September 25, 2013)

http://www.bizjournals.com/phoenix/

A new economic study pours water on the projected benefits of a huge proposed copper mine 60 miles east of Phoenix.
But the authors of a previous study, commissioned by the multinational companies proposing the mine, are sticking by their more ambitious projections.

The competing studies look at the proposed Resolution Copper Mine in Superior. The mine would be one of the largest in the world and is proposed by U.K.-based Rio Tinto PLC and Australia’s BHP Billiton Ltd. The two companies are among the largest copper miners in the world.

The San Carlos Apache Tribe — which opposes the mine — commissioned a new study by University of Montana economist Thomas Power and his firm Power Consulting Inc. The study takes issue with a 2011 study commissioned by Resolution Copper Co. and conducted by Scottsdale-based Elliott D. Pollack & Co.

Resolution Copper is the company formed by BHP and Rio Tinto to develop the mine. The Pollack study projects the mine will create 3,719 jobs statewide worth $220.5 million in annual wages. That includes 1,429 direct mining jobs for the mine.

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