Rio Tinto cuts 2020 copper targets on Kennecott delay

Rio Tinto (NYSE: RIO; LSE: RIO) has cut its refined copper production target for fiscal 2020 due to delays in restarting a smelter at its Kennecott mine in Utah.

The world’s second-largest miner expects the facility to be running again in two months, which would result in 30,000 tonnes of lost production.

Rio Tinto now expects full-year refined copper production for the group to be 135,000-175,000 tonnes, down from a previous range of 165,000-205,000 tonnes.

The company’s copper output fell by 5% last year to 577,000 tonnes, largely because of low grades at Kennecott.

Rio Tinto churned out 186,800 tonnes copper at Kennecott last year, and it has approved an investment of US$1.5 billion over the next six years to continue production at the mine.

The miner has been investing heavily in the red metal over the past two years. It believes the market will soon go into deficit as bigger power grids and an electric-vehicle boom boost demand.

Rio Tinto allocated US$302 million to advance its Resolution copper project in Arizona last year. It has also made progress at other copper projects, including Berenguela, in southeastern Peru, and applied for exploration permits in northern Chile.

In April, the mining giant announced it would spend a further A$9.2 million (US$6.6 million) on exploration at the Citadel copper-gold project, a joint venture with junior Antipa Minerals in Western Australia’s Paterson province.

The earmarked budget for this year was well above the previous commitment of A$2 million put forth in January, when Rio Tinto earned 51% of the project, Antipa said in a press release.

In the past, analysts have questioned the mining giant’s ability to scale up its copper business quickly without making an expensive acquisition, especially after facing challenges at key assets.

Rio Tinto has also delayed production from the US$5.3 billion underground expansion of its Oyu Tolgoi copper-gold-silver mine in Mongolia. Originally scheduled for early 2020, it is now expected to happen in the third quarter of 2021.

The company said that, as a result, copper and gold output would drop at the operation.

— This article first appeared in MINING.com.