MELBOURNE – Rio Tinto Group’s much-followed copper discovery in remote Western Australia could leapfrog a key US project to be fast-tracked into production by the world’s No. 2 miner, according to a senior executive.
Work is progressing to assess the size and quality of the Winu exploration project in the Paterson province in the state’s north, Copper and Diamonds CEO Arnaud Soirat said after visiting the discovery for the first time this month.
Dependent on further exploration work, the discovery – where Rio now has as many as 190 staff, about 12 drilling rigs and is constructing a gravel airstrip – could move ahead of the Resolution project in Arizona in the producer’s pipeline.
The company is already advancing an underground expansion of the Oyu Tolgoi copper mine in Mongolia that’s scheduled to boost production from the early 2020s and expects key studies on Resolution to be completed by 2021. Rio has been working on the Resolution project — a joint venture with BHP Group — since 2004, and disclosed the first key details about Winu in February.
“If the deposit is right, and the metallurgy is right, then potentially” Winu could come before Resolution, Soirat told reporters Friday at the Argyle diamond mine, also in Western Australia. The site looks “not that difficult to mine from what we have seen so far, and so potentially it’s a mine that could come in between” Oyu Tolgoi’s expansion and the development of Resolution, he said.
Copper demand is seen growing about 2-3% a year, driven by urbanization, greater adoption of renewable energy generation and rising demand for electric vehicles. Rising global living standards as developing nations urbanize will require about an extra 428-million tons of copper by 2050, or about two-and-a-half times the current amount of the metal installed today, according to Glencore.
While the Winu find, about 350 kilometers (220 miles) southeast of Port Hedland, has excited investors and competitors -- prompting some to pour over satellite imagery to gauge the project’s potential -- more assessment is still needed, Soirat said. Additional drilling this year should allow Rio to understand “how rich the deposit is, and how big it is as well,” he told reporters.
Exploration staff are also ready to begin studying potential other targets nearby, according to Soirat. There’s potential that the Winu discovery could be part of a much a larger system that may eventually host multiple different mines, Rio’s CEO Jean-Sebastien Jacques said in May.
“This is also a very big mining license, so we will also be looking at other potential sites in the region,” Soirat said. “There are some signs where our exploration team are saying it would be worth going to having a look.”
Soirat also said:
- In Mongolia, Rio is continuing to review the schedule and construction costs of Oyu Tolgoi’s underground development amid difficult ground conditions that have slowed the planned $5.3 billion project
- Company is “looking at potential options” for copper acquisitions, but doesn’t regard M&A as a “must” and hasn’t found options that represent value
- Company is studying options to further extend the life of the Kennecott mine in Utah, and investigating potential options to carry out selective underground mining at the site
Rio’s projects are “nicely timed to come online at a time when everyone expects the market to start becoming under-supplied,” he said