Rio Tinto boosts budget for Citadel copper project in Australia

Rio Tinto ( NYSE: RIO; LSE: RIO) will spend a further A$9.2 million (US$5.9 million) on exploration at the Citadel copper-gold project, a joint venture with junior Antipa Minerals (ASX: AZY), in Western Australia’s Paterson province.

The budget earmarked for this year is well above the previous commitment of A$2 million (US$1.3 million) put forth in January, when Rio Tinto earned 51% of the project, Antipa said in a statement.

The exploration activities, expected to begin this quarter, will include combined reverse circulation (RC) and diamond drilling at the Calibre deposit, located 28 miles from Rio Tinto’s Winu copper-gold project.

Antipa, which is also carrying out exploration activities on the North Telfer project, located 40 km north of Newcrest Mining’s (ASX: NCM) Telfer copper-gold-silver mine, said the program would now encompass up to 13,000 metres of combined diamond and RC resource drilling.

Due to current restrictions caused by the coronavirus pandemic, the completion of a previously planned RC drill program for the greenfield targets has been postponed, likely until the end of 2020 or early 2021.

Rio Tinto has been investing heavily in copper in the past two years, as it believes the market will soon go into deficit amid expectations that bigger power grids around the world and an electric-vehicle boom will boost demand, while supplies will remain constrained.

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 delayed first 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.

Earlier this month, the mining giant flagged copper and gold output drops at the already troubled operation.

Rio Tinto said that it would have to bring experts on-site to rectify industrial ropes in the largest and most important access shaft to the underground mine, Shaft 2.

Those ropes service a giant elevator that allows workers, equipment and ore to move between the bottom of the mine, 1.3 km underground, and the surface.

Oyu Tolgoi operator, Turquoise Hill Resources (TSX: TRQ; NYSE: TRQ), said the COVID-19 pandemic was making it hard to get experts to the remote Mongolian mine to conduct rectification work on the ropes.

Demonstrating an increased interest in copper discoveries, Rio Tinto invested a further US$302 million to advance its Resolution copper project in Arizona last year. It has also been advancing other copper projects, Berenguela, in southeastern Peru, while applying for exploration permits in northern Chile.

— This article first appeared in our sister publication, MINING.com.