Rio well placed to supply future demand

Today Rio Tinto released resource updates on three major projects – La Granja and Resolution (copper) and the Simandou iron ore project in Guinea. Rio Tinto today told investors that it is exceptionally well-placed to take advantage of an expected doubling of world demand for its metals and minerals by 2022. The Group gave details of expansion plans for existing operations and underlined its strong project pipeline. Chief Executive Tom Albanese and his senior management team provided detail on resource upgrades, as well as new information on the project pipeline at a ‘value and growth’ seminar in London.

CFO Guy Elliott set out the internal valuation methods that Rio Tinto employs for its future growth options.

Significant new resource estimates, across different orebodies, which will underpin the Group’s superior trajectory for long term growth include:

  • Simandou project in Guinea announced new resources of 2,250 Mt of iron ore
  • La Granja project in Peru announced 2,800 Mt of Inferred copper resources at 0.5% Cu and 0.% Zn
  • Resolution project in Arizona, USA, announced 1,300 Mt of Inferred resources containing 1.51% Cu and 0.04% Mo
  • Sulawesi Nickel project yesterday announced 162 Mt lateritic nickel Inferred resource with potential for further mineralisation through further exploration.
  • In addition, Kennecott Utah Copper last week announced an upgrade of resources to 637 Mt at 0.48 per cent copper at its Bingham Canyon mine.

In his presentation, Tom Albanese said that Rio Tinto’s compound annual production growth is expected to be 8.6% through to 2015 and that worldclass growth options in place beyond this time are very valuable, especially in strong markets: “Demand growth remains strong and, combined with supply side constraints, this means there has never been a time at which our options for expansion have been so valuable. With world demand for our products set to double by 2022, we have the reserves and resources in place to keep pace with the market.

“Rio Tinto has a clear roadmap to deliver industry leading growth over the next few years, but this is just the beginning. Rio Tinto will continue to unlock value from tier one assets that are unrivalled in the sector.”

The seminar outlined the role of Rio Tinto’s Exploration team in discovering and developing tier one prospects that offer options for continued growth. Eric Finlayson, Head of Exploration, presented on Rio Tinto’s disciplined focus on large, long life deposits which are profitable in all phases of the price cycle. He provided details of a pipeline of greenfield opportunities including nickel in Minnesota, coking coal in Mongolia and western Canada, diamonds in India, potash in Saskatchewan and lithium in Serbia. He also talked about brownfield coking coal and uranium opportunities.