Rio Tinto CEO Jean-Sebastian Jacques
Photo by: Bloomberg
PERTH (miningweekly.com) – Diversified major Rio Tinto on Friday announced that it would cut its capital expenditure (capex) by some $2-billion in the wake of the Covid-19 pandemic, while also lowering its copper production guidance for the full year.
The miner told shareholders that capex for the full year would be between $5-billion and $6-billion, down from the previous guidance of $7-billion, partly owing to Covid-19 constraints, and partly owing to the favourable currency impact from the strong US dollar.
The miner said that the capex originally planned for 2020 could subsequently flow into 2021 and 2022.
Rio reported that all major projects being undertaken by the company progressed well in the first quarter ended March, but were now being affected by the Covid-19 restrictions.
“The team is investigating ways to mitigate Covid-19 impacts, including those associated with roster changes, travel restrictions and the design and fabrication of long-lead items in China and Europe. While it is too early to estimate, the restrictions are likely to have some impact on our progress,” the company said.
“In these uncertain and unprecedented times, we continue to deliver products to our customers with our first priority to protect the health and safety of all our employees and communities,” said CEO Jean-Sebastian Jacques.
“We are focused on maintaining a business as usual approach and have taken extensive measures to ensure we can do so safely.
“All of our assets continue to operate and we achieved a very robust production performance in the first quarter. Our world-class portfolio and strong balance sheet serve us well in all market conditions and are particularly valuable in the current volatile environment.
“Our resilience and value over volume strategy mean we can continue to invest in our business, and support our communities and host governments.”
During the three months to March, Rio reported a 5% increase in iron-ore shipments from the Pilbara, compared with the previous corresponding period, at 72.9-million tonnes, with iron-ore production up by 2% in the same period, to 77.8-million tonnes.
Bauxite production in the March quarter reached 13.8-million tonnes, an 8% increase on the previous corresponding period, while aluminium production was down 2% to 783 000 t.
Meanwhile, copper production for the three months to March declined by 8%, to 133 000 t, reflecting the anticipated lower grades at both the Kennecott and Oyu Tolgoi operations, which was partially offset by higher throughput.
Rio noted that at the Kennecott operation, the company was working to resume normal operations following a 5.7 magnitude earthquake in March, with the mine, concentrator, tailings storage facility and refinery all having resumed operations.
However, some damage has been reported at the furnace, which will impact the full year production guidance at the operation.
Rio on Friday downgraded its mined copper production guidance from the original between 530 000 t and 570 000 t, to between 475 000 t and 520 000 t, while refined copper production has been downgraded from between 205 000 t and 235 000 t, to between 165 000 t and 205 000 t.
Rio said that in addition to the repairs anticipated at Kennecott, measures taken at its Escondida mine to halt the spread of the Covid-19 pandemic, would also impact production.
The company has maintained its production outlook for its remaining commodities.