|Bid||54.92 x 800|
|Ask||54.93 x 900|
|Day's Range||54.12 - 55.01|
|52 Week Range||35.35 - 64.02|
|Beta (5Y Monthly)||0.62|
|PE Ratio (TTM)||11.25|
|Forward Dividend & Yield||3.82 (7.08%)|
|Ex-Dividend Date||Mar. 06, 2020|
|1y Target Est||54.76|
The global impact of COVID-19 has been unprecedented and it is far from over, but for savvy investors there may be no better time to invest in “indirect” discount gold
Rio Tinto’s iron ore business in Western Australia is continuing to recruit for skilled roles, apprentices, graduates and Aboriginal trainees to fill vacancies as the company progresses its development plans in the Pilbara.
The Royal Flying Doctor Service (Queensland Section) and Rio Tinto have formed a new partnership to improve emergency and remotely delivered health care services across regional Queensland.
(Bloomberg) -- Key investor advisory groups are divided on whether Rio Tinto Group shareholders should support a demand for the world’s No. 2 miner to extend the range of its targets to reduce greenhouse gas emissions.Institutional Shareholder Services Inc. is recommending Rio investors support a resolution tabled by an advocacy group calling on the producer to add additional targets, including so-called scope 3 emissions -- those generated by customers through the use of its products. In contrast, Glass Lewis & Co. advises holders to reject the plan at an annual meeting on Thursday.The division highlights a debate in the mining and energy sectors on the extent to which raw materials companies bear responsibility for emissions created when customers, such as steel mills, use their products. BHP Group has pledged to set goals for its scope 3 footprint later this year, and Royal Dutch Shell Plc last month set out plans to cut the same category of emissions by 65% by 2050.Shareholders “have a long-term interest in assessing whether Rio Tinto is adequately assessing and acting on its climate risk and opportunities,” including through “targets to work with its customers to achieve reductions in its scope 3 emissions,” ISS said in an April 30 note to clients, recommending they vote in favor of the proposal submitted by environmental campaign group Market Forces and a small group of investors. Rio has advised investors to vote against the proposal.Why ‘Scope’ Matters for Oil Companies Cutting Carbon: QuickTakeLondon based-Rio argues that unlike competitors who produce fossil fuels and can potentially supply less-carbon intensive alternatives, it has little capacity to address the emissions created by its customers. The company’s scope 3 emissions are generated mainly when its iron ore is used in China’s steel mills, or bauxite is consumed in the aluminum-making process.“Our ability to directly influence our customers’ emissions is limited,” Peter Toth, Rio’s global head of corporate development, told an investor meeting last month. “It is even difficult to accurately quantify their emissions and so our strategy is to work in partnership across these value chains.”The producer is collaborating with China Baowu Steel Group and Tsinghua University in Beijing to curb pollution in the steel sector, which accounts for about 7% of all global emissions.Read More: Rio Tinto Rejects Setting Targets for Customers’ PollutionDirect annual emissions from Rio’s operations are about 31.8 million tons of carbon dioxide equivalent, compared with the company’s estimate of about 491 million tons of emissions in its wider supply chain, the miner said earlier this year.Rio said in February it would seek to cut emissions from its own businesses by 15% on 2018 levels by 2030, will target net zero emissions by 2050 and spend $1 billion over the next five years on the efforts.While the producer should continue to reduce its own emissions, it’s probably not “feasible for the company to set goals based on how its customers determine to utilize its products,” Glass Lewis said in a note to clients last month. The producer has made “extensive disclosure on the steps it is taking to mitigate its environmental impact,” according to the adviser.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
In order to support local community efforts to fight COVID-19 and its social and economic impacts, Rio Tinto is investing $10 million in a variety of grassroots projects across Canada and the United States.
(Bloomberg Opinion) -- It’s looking decidedly somber out there for the world’s favorite sparkly stone.Diamonds were ailing even before the coronavirus came along. Now, weeks into lockdowns in the U.S. and elsewhere, all but the largest diggers, polishers and retailers are struggling for cash. Unable to sell its stones, Dominion Diamond Mines, the miner that sold luxury brand Harry Winston to Swatch Group AG in 2013, filed for insolvency protection late Wednesday. Anglo American Plc’s De Beers cut 2020 production guidance by a fifth Thursday, in line with demand.To secure their future, diamond giants may need a rebranding akin to the storytelling feat pulled off by Harry Oppenheimer, the late De Beers chairman who cultivated the engagement ring to overcome a slump after the Great Depression. In so doing, he forged a tradition that fueled sales for decades. Today, a refreshed myth-making effort could target the post-pandemic concerns of millennial consumers: marketing the diamond as a store of value in volatile times comparable to art, which is also authentic, traceable and sustainable.Since 2011, when prices peaked thanks to China’s new shoppers, diamonds have faltered. Lab-grown stones, initially priced confusingly close to the real thing, posed a challenge. To make things worse, a supply glut hit the market, pushing producers to cut prices. A 26-million-carat increase in 2017 was the largest single-year volume addition since 1986, according to consulting firm Bain & Co. Meanwhile, financing availability shrank dramatically as traditional lenders pulled away. A 2018 fraud scandal involving celebrated Indian jeweler Nirav Modi didn’t help. The coronavirus will accelerate some developments that aren’t unwelcome. In supply terms, the industry may look healthier if older or more marginal mines are obliged to stop digging. Rio Tinto Group last year had already announced the 2020 closure of its Argyle mine, which produces both low-quality gems and fabled pink diamonds, taking some 13 million carats out of global annual production of just over 140 million. The current crisis will add to that. In March, Dominion stopped work at its Ekati mine in Canada, and other pits have been closed or are working only partially. Not all will return.There will be a shakeout among polishers and perhaps more integration in some parts of the industry, of the sort demonstrated by Louis Vuitton’s purchase earlier this year of the largest rough diamond since 1905. Sales of rough and polished stones will change too, as travel restrictions in South Africa, Botswana and India push more deals online. It’s a remarkable feat for a conservative industry that thrives on face-to-face interaction, and arcane systems like De Beers’ “sights,” as its regular sales are known.Yet the scale of this health crisis, rapidly turning into an economic cataclysm, has also made other problems far worse. India’s polishers are not only strapped for credit, but also struggling with a weaker rupee, lockdowns and curfews; Thousands of workers have been forced to leave hubs like Surat altogether. Elsewhere, both diamantaires and jewelry buyers are stuck at home, making it harder to clear excess inventory. The flow of diamonds has dwindled to barely a trickle.The real concern is demand, where a grim outlook for disposable incomes suggests a hoped-for 2020 recovery is impossible, even as supply shrinks. The very top of the market may be insulated, but further down even China’s “revenge purchases” aren’t going to be enough. As my colleague Nisha Gopalan has pointed out, such splurges won’t save luxury products — especially if U.S. job losses continue to pile up. Inventory could flood the market, too.All this upheaval does makes it a good time to rethink the storytelling behind diamonds, though. Coordinated marketing, once the industry’s go-to solution, will need to make a comeback as consumers emerge from the wreckage of coronavirus. Post-pandemic values may change broadly.Three things could be highlighted. First, a store of value for the long term, especially for the largest gems where prices vary less. Like art, or fine wine, only wearable. Better yet, to appeal to the millennials that make up its consumer base, the industry can promote the stones’ authenticity, building on existing work around provenance and traceability, dating back to the Kimberley Process, the multilateral system aimed at ensuring the proceeds of diamond mining aren’t used to fund conflict. The industry is also sustainable, with relatively clean, chemical-free processes.Marketing spend has recovered after a dip in the past decade, but coordinated industry expenditure remains far below even the early 2000s. While the likes of De Beers and Alrosa PJSC may be reluctant to sponsor cash-strapped smaller rivals, it would be money well spent. Nearly seven decades after Marilyn Monroe’s immortal song, it's time for a new myth.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Last year was supposed to be an aberration for iron ore, an unexpected period of sky-high prices after a fatal dam collapse in Brazil and a tropical cyclone in Australia. Instead, it continues to defy gravity. Sheltered from the worst of the pandemic upheaval, Australian diggers like BHP Group, which reported stable output for the March quarter Tuesday, can expect to benefit.Rio de Janeiro-based Vale SA warned just weeks ago that weak demand from steel mills outside China would hurt iron ore as the coronavirus spreads, industrial appetite shrinks and producers bring down the shutters. The first part of the statement has proved accurate: Bloomberg Intelligence forecasts that pandemic-linked manufacturing shutdowns, especially among automakers, will drag demand down by 10% to 15% in the U.S. and Europe this year. BHP says it expects steel outside China to contract by a double-digit percentage, as logistical difficulties and collapsing demand force customers to cut back. Yet prices remain surprisingly robust, with Singapore futures hovering around $83 per metric ton. The main explanation sits with China, where furnaces and construction projects are recovering. The country accounts for about 70% of global demand for seaborne iron ore, so a rebound there matters far more than pain elsewhere. By way of example, China’s import requirements amount to about 1.1 billion tons, against 100 million for Europe.While the risk of a second wave of infections remains, China’s return to work is real: Port stocks have been steadily reducing, while premiums for higher-quality material have been unusually high. BHP estimates electric-arc furnace utilization has recovered to 56% after falling to 12%. It’s true that exporters of finished products such as excavators will be hit by a weak global economy, but a lot more ore is gobbled up for the giant home market.Alongside that, global supply is doing worse than many expected. Granted, widespread closures aren’t just a problem for iron ore. Coronavirus stoppages are hitting other commodities like copper, where Chris LaFemina at Jefferies estimates 20% of supply is now impacted, versus 8% for global iron ore. That supply crunch is supporting base metals and other commodities to the point that China’s grim first-quarter economic data left the metal uncharacteristically unruffled Friday.For iron ore, there’s more. On top of the pandemic, there are ongoing disruptions: specifically, upheaval at Vale, which is still struggling with permits as it tries to recover from the Brumadinho dam collapse. On Friday, the company cut 2020 production expectations for iron ore fines to 310 million to 330 million tons, from 340 million to 355 million, while warning the fallout from the health crisis could get worse. The Brazilian government’s poor handling of the pandemic means it isn’t impossible to imagine a drop to 2019’s level of 302 million tons — a significant loss to a large, though tight, seaborne market.For producers Down Under, none of this is bad news. While in copper everyone is suffering as large mines from Latin America to Africa slow or stop digging, the pain in iron ore hasn’t been equally distributed. Australia’s enormous Pilbara operations have by and large kept going, with exports up significantly last month. Vale is benefiting from higher prices that may cushion output losses; by contrast, the big Australians are digging and selling more, too. BHP reported a 3% increase in production for the nine months to the end of March. Rio Tinto Group, now the world’s top producer, last week also reported higher first-quarter output and shipments, compared to a year earlier.Better yet, costs are coming down. That’s thanks to the effects of a weaker domestic currency against the U.S. dollar, rock-bottom oil prices and still-depressed shipping rates. BHP’s unit costs for Pilbara already hovered around $13 per ton. At the same time, realized prices have held — BHP says its average in the March quarter was just over $74 per ton, down just 5% on the six months to December. That will help offset damage in harder-hit commodities, particularly oil.It’s unclear how long this corner of the commodities market will continue to hold up. Other producers may well limp back, adding to supply, and China could face further virus setbacks. For now, Brazil looks vulnerable and China robust. It may be another unexpected year of grace for iron ore. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Rio Tinto has introduced further measures to help combat the spread of COVID-19 in Western Australia following the start of rapid screening trials at Perth Airport.
(Bloomberg Opinion) -- After years of buying at the peak of the economic cycle and selling in the trough, could the world’s big diggers do the reverse? Compared to peers in oil and gas, Rio Tinto Group and the largest diversified miners are riding out the coronavirus storm in sheltered positions: They have low operating costs, little debt and more than $60 billion in liquidity.History matters here. Just over a decade ago, miners binged on hubristic investments like Rio’s acquisition of aluminum producer Alcan or Anglo American Plc’s Minas Rio iron-ore venture. In the hangover years between 2012 and 2016, some $200 billion was written off, and a generation of chief executives were shown the door. It was a near-death experience akin to what the energy sector is going through today, and one that left behind an industry focused on cleaning up, cutting back and returning cash to shareholders. Rio has been among the most generous, handing back $36 billion since 2016.It means the industry’s largest players went into this crisis with two things: balance sheets at their most robust in years, and a pedestrian growth outlook. Almost the opposite is true at long-coveted targets like Freeport-McMoRan Inc., with a market value of $11 billion, and First Quantum Minerals Ltd., valued at $3.5 billion. These mid-size base metal producers are beginning to look fragile, with expanding copper mines but nearly $19 billion of total debt between them. Their shares have fallen more than 40% this year. No one knows how long a recovery from the pandemic will take, or what life will look like on the other side, but miners have a little more certainty than most: Metals like copper, used for electrification and a host of consumer goods, will be needed, and will be in short supply. It’s a tantalizing state of affairs. As ever, things aren’t quite that simple, and even the heftiest miners aren’t immune to the world’s turmoil. BHP Group has to contend with the crashing oil price. Anglo American is dealing with lockdowns in South Africa, Peru and elsewhere, as governments try to contain the spread of coronavirus. Glencore Plc, long the most buccaneering of the large players, is tackling succession, trouble in Zambia and a pending U.S. Department of Justice investigation into its business practices.At Rio, Chief Executive Officer Jean-Sebastien Jacques has perhaps the strongest motivation to act. He is less exposed to many of these uncertainties, and is running a miner that still relies on iron ore for about three-quarters of its Ebitda, as steel consumption hovers at or near a peak in China. Large mainland miners, like acquisitive Zijin Mining Group or Jiangxi Copper Co., may be his competitors. There are cashed-up bullion players, too: Barrick Gold Corp.’s CEO, Mark Bristow, has said he could consider copper and even Freeport’s Indonesian Grasberg mine.The trouble is, we’re not yet at the distress levels that will prompt boards to approve a rush for checkbooks. Travel and due diligence are impossible, markets are too volatile for share deals and the next few months remain an unknown quantity. Shareholders may balk. In past crises, even distressed sellers were able to command premiums, so bargains will be tough. Copper prices are still above the depths of 2016.Worse, not even the most obvious prey would be easy to snap up: Freeport and First Quantum come with traps. Freeport, the world’s largest listed copper producer, faces the question of who will lead it when veteran Richard Adkerson retires, along with concerns over older U.S. mines and the costly move underground at Grasberg. Rio, unhappy with the environmental and political risks, sold its interest in the Indonesian mine in 2018. First Quantum, more bite-sized and so perhaps more appealing, battened down the hatches earlier this year with a poison pill, after Jiangxi Copper built an 18% stake. Its flagship Cobre Panama mine has yet to operate through a full wet season. Chinese players eyeing miners with Australian assets, meanwhile, would also have to deal with a regulator bent on discouraging opportunistic foreign bargain-hunters.Yet the longer the pandemic lockdowns drag on, the more the pain increases, as fixed costs go out and no cash comes in. It’s visible already in lithium, with Tianqi Lithium Corp. seeking to sell part of its stake in the Greenbushes operation in Australia, as it struggles to repay debt taken on to buy a stake in Chilean giant SQM. It’s rare to see large Chinese producers in distressed sales, even if lithium prices have plummeted since 2018. Rare-earth producer Lynas Corp., meanwhile, says it may need public funds to complete an ore-processing plant. Buyers won’t pounce yet. A global economic recovery isn’t in sight and will be slow; most will need a little more confidence that growth is coming back. That will mean a wider improvement than China’s stimulus and return to work, as encouraging as State Grid Corp.’s 2020 investment plans may be. They’ll also need travel restrictions to lift. Wait too long, though, and the opportunity to buy cheap will pass — again. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Rio Tinto Chief Executive J-S Jacques 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. We are focused on maintaining a business as usual approach and have taken extensive measures to ensure we can do so safely.
Madison Metals and American Pacific Mining Corp (CSE: USGD / FWB: 1QC / OTCPK: USGDF) (“APM” or the “Company”) is pleased to announce the company has signed a definitive agreement with Madison Metals to acquire the Madison Copper Gold Project near Silver Star Montana, USA. The project is currently under an earn-in, joint venture agreement announced by Broadway Gold on April 30, 2019, whereby Kennecott Exploration Company, part of the Rio Tinto Group (ASX, LON: RIO) may spend $30 million USD to earn up to 70% of the project. Drill results from Kennecott’s 2019 drill program are pending and should be released shortly.
Pentwater Capital Management LP ("Pentwater"), a long-term supportive investor and the largest minority shareholder of Turquoise Hill Resources Ltd. ("Turquoise Hill" or the "Company") (TRQ.TO) (TRQ.TO), owning, together with its affiliates and associates, approximately 9.09% of the Company's issued and outstanding common shares, today responded to Turquoise Hill’s April 6, 2020 press release. Pentwater believes that Turquoise Hill’s release not only fails adequately to address the important concerns voiced in Pentwater’s recently filed proxy circular, but is both misleading and inaccurate in its attempt to deflect accountability for the self-inflicted wounds that have been an overhang on the Company's otherwise world-class asset base away from the Company’s management team and board of directors (the "Board").
Rio Tinto paid $7.6 billion in taxes and royalties globally in 2019, including $4.8 billion of corporate tax, as detailed in its latest Taxes paid report, published today.
(Bloomberg Opinion) -- Aluminum isn’t the worst-performing base metal this year, an honor that goes to copper. Yet that’s only because it had less far to fall: Demand was ailing well before the coronavirus forced some three billion people to stay home. Add the near-total shutdown of the world’s auto and aviation industry, crunching more than a third of demand, and the lightweight metal is fast heading for levels last seen during the global financial crisis. That should translate into some of the mining industry’s deepest cuts as the pandemic forces producers such as Alcoa Corp. and Rio Tinto Group to take long-overdue decisions.Aluminum is a serial underperformer, having racked up the biggest real losses for any base metal since 1913, according to Bloomberg Intelligence. Demand has slowed for a decade, and a surplus was expected this year even before the current crisis. Prices have declined for eight consecutive weeks to below $1,500 per metric ton. That’s made most of the world’s production unprofitable.The metal has never been good at responding fast to a changing market. That’s partly because it’s inexpensive to mine the raw material bauxite. At the same time, smelters that produce aluminum metal from its oxide are slow and expensive owing to fixed costs such as power. As a result, the industry is still working through the stockpile accumulated during the last crisis. In this context, it’s less surprising that China’s aluminum production increased in the first two months of the year.The scale and speed of the demand drop caused by the coronavirus will test the industry’s elasticity. Aircraft makers are pondering production cuts, while automakers have shut down from Japan to Germany. The premium paid by Japanese buyers over the London Metal Exchange price is at its lowest in over three years. Car sales in locked-down economies have dropped by around 80%. Other sources of demand, like machinery, have been little better. While shoppers have hoarded canned food, this accounts for a small fraction of aluminum usage.Analysts at BMO LLC estimated late last month that worldwide primary aluminum demand could fall 6% in 2020 from a year earlier — similar to 2008, but larger in absolute volume terms. That’s not the steepest estimate out there, yet they suggest it already entails an unsustainable surplus of 4.2 million tons, roughly 5% of global demand. Aluminum giants cut back during the global financial crisis, and a few years later in 2015, when cheap Chinese metal flooded the market. China won’t help much to soften the blow this year, even when the full extent of Beijing’s stimulus plan is unveiled. In 2009, when consumption dropped 17% outside China, it rose 15% inside the country, according to a Boston Consulting Group report. This time, even Chinese appetite could take years to recover fully.There are some welcome signs of realism. Norsk Hydro ASA said last week it would postpone the restart of its Husnes plant. Analysts at CRU Group estimate some 365,000 tons of Chinese capacity has already been taken out. More should be on the way, even if low-cost production from the likes of China Hongqiao Group Ltd. is spared: Russian giant United Co. Rusal estimated in mid-March that at prices below 13,000 yuan ($1,830) per metric ton, more than a quarter of China’s smelters, equivalent to 10 million tons of annual capacity, were losing money. Less environmentally friendly operations will suffer disproportionately.Rio Tinto, meanwhile, had already been reviewing its Tiwai Point smelter in New Zealand and its ISAL smelter in Iceland, and now needs to think hard about the capital allocated to its least profitable division.All of those cuts and more will be needed, especially if demand weakness lingers. BMO forecasts 4.2 million tons per year of idled capacity by the third quarter, rising to 10 million tons by 2025. There are plenty of unknowns, from how long the downturn lasts to the level of demand from traders seeking to bet on stronger markets down the road. For now, absent a significant reduction to supply, it’s hard to see anything but a dim future.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Turquoise Hill shareholders have suffered massive value destruction at the hands of Rio Tinto, which operates the Oyu Tolgoi Project (allegedly under the watchful eye of Oyu Tolgoi's majority owner, Turquoise Hill) while also being the majority shareholder of Turquoise Hill. Turquoise Hill’s board and management have failed to effectively oversee Rio Tinto, and intervene in the abuse of control and refusal to make complete and truthful disclosure by Rio Tinto of the Oyu Tolgoi Project.
Rio Tinto Ltd <RIO.AX> <RIO.L> said on Tuesday its Tiwai smelter in New Zealand will scale back some operations to ensure the health and safety of its workers and comply with government restrictions on containing the coronavirus. New Zealand is in a four-week lockdown to contain the virus that has infected more than three quarters of a million around the globe. The smelter will scale back part of its aluminium making facilities, and affected workers will be reallocated to other areas of the plant, Rio Tinto Aluminium New Zealand said in a statement.
Rio Tinto chief executive J-S Jacques said "Covid-19 is a human tragedy and we all have to play our part as the pandemic spreads. Rio Tinto’s first priority remains the health and safety of all of our employees and communities. During these uncertain times, we continue to deliver products to our customers supported by our global sales and marketing teams.
Rio Tinto <RIO.L> <RIO.AX> said on Thursday it had found several cases where Australia's biggest mining industry body advocated for thermal coal in contravention of 2015 Paris climate goals, as it released a review of its membership in industry groups. Rio Tinto laid out its expectations for the industry associations that it funds last April to ensure that their policy on climate change and energy advocacy was consistent with the miner's own, as well as the Paris Agreement which aims to limit global warming to "well below" 2 degrees Celsius. Where there was a lack of cooperation on advocating for those policies, Rio would reconsider its support and its membership of the groups, it said in an updated review released overnight.
The Zacks Analyst Blog Highlights: Freeport-McMoRan, Teck Resources, Vale, Rio Tinto and Southern Copper
Today, as a result of separate actions by the Premier of Quebec and the President of South Africa to contain the spread of COVID-19, Rio Tinto will slow down some of its operations.
The Anglo-Australian miner said production at its Richards Bay Minerals in South Africa will be halted on Thursday for 21 days, in line with a nationwide lockdown after the number of cases sharply rose. It was too early to predict the impact of the disruption to operations on its production forecast for fiscal 2020, or when things will get back to normal, Rio said in a statement. In Canada, Rio Tinto said it was working to comply with the Quebec government's directive to reduce business activity after the province tightened restrictions, including ordering the closure of all non-essential businesses.
(Bloomberg Opinion) -- Lockdowns imposed to control the coronavirus have battered China’s appetite for everything from coal to copper, pushing stockpiles of raw materials higher and global prices lower. The next crunch could come from supply. The risk of an outbreak is growing in ill-prepared producer countries, with mandatory quarantines and border shutdowns threatening to choke off production.Prices of bulk commodities are already seeing some support from such disruptions, as ports and mines close. Coking coal in particular has outperformed owing in part to Mongolia’s decision in late January to seal its border with China, which cut off a key source of supply. The impact may be only short term. With factory shutdowns spreading through the U.S. and Europe, the reduction in wider metals supply would need to be dramatic to offset crumbling global demand. Upheaval could provide some price support regardless.Appetite for virtually all commodities has slumped since January, when the extent of damage from the novel coronavirus became clear. Even where mills, smelters and factories stayed open, that largely translated into crammed warehouses. China’s industrial production, investment and retail sales for the first two months of the year plunged across the board, with construction particularly weak. China’s economy is now all but certain to contract in the first quarter from a year earlier.With European automakers and other manufacturers shuttering operations, the drop in commodity demand in the first three months is likely to be even worse than during the global financial crisis. Steel demand will fall more than a fifth, copper will slide 14% and aluminum almost a third, analysts at BMO Capital Markets estimate.It hasn’t helped futures prices that the latest wave of closures is coming as we head into the second quarter, usually a peak period for demand. China, by contrast, was worse hit during the quieter Lunar New Year. Copper, a bellwether of confidence in global manufacturing, has tumbled to four-year lows of around $4,800 per metric ton on the London Metal Exchange.Travel and quarantine restrictions have already damaged supply, making it harder for miners to fly employees in and out and impeding projects under construction. Peru’s quarantine has already prompted Anglo American Plc to stop all nonessential work at its $5 billion Quellaveco project and withdraw most of the site’s 10,000 staff and contractors. Canada’s Teck Resources Ltd. has suspended work at its Quebrada Blanca Phase 2 in Chile, while Rio Tinto Group says work has slowed on its underground mine at Oyu Tolgoi in Mongolia.Lockdowns may be even more severe. Copper mines are among the worst affected as Chile and Peru, the world’s top two producers, scramble to contain the virus, prompting Anglo American, Antofagasta and others to send staff home. Chilean state behemoth Codelco will work at reduced capacity for two weeks, while workers at BHP Group’s Escondida, the world’s largest copper mine, threatened action to compel the company to take more preventative steps. The miner said Saturday it would reduce the number of contractors onsite. Analysts at Bank of Nova Scotia estimate a two-week halt in operations in those two countries would amount to 325,000 tons of lost production — roughly 4% of their combined annual output. This serves to underline the geographical concentration of a handful of key materials. Lithium is produced mainly in Chile and Australia, while iron-ore exports are dominated by Australia and Brazil. The price surge after last year’s Vale SA dam disaster shows what a port closure could do to the iron-ore market, though such a move appears unlikely given the huge budget contribution that the material makes to Brazil and Australia.Many producer countries are developing economies and ill-equipped to handle an epidemic that has floored even the world’s richest nations. In Brazil, the response has been patchy at best, with some states taking measures that are increasingly at odds with the federal government. Poorly implemented lockdowns, as seen in the Philippines, could push thousands of casual workers out of cities in search of work in more remote areas — potentially extending the spread.If more drawbridges are raised, expect supplies from explosives and tires to heavy equipment to get blocked, hampering even mining operations that could otherwise keep going. In the meantime, low prices will hurt some higher-cost projects, though rock-bottom prices for oil, a significant input, will cushion the blow. This will affect smaller producers first, given the healthy balance sheets of big miners. Still, operations like Rio’s Pacific Aluminium, or pricey U.S. copper mines, look vulnerable.Demand was the first part of an unprecedented crunch for the global commodities industry. The second act is only beginning. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Rio Tinto’s Kennecott mine near Salt Lake City (SLC), Utah, was today impacted as a result of a 5.7-magnitude earthquake close to the town of Magna. All employees have been safely accounted for and evacuated from the potential risk areas. At this stage we have identified limited damage to the operation or risk to the surrounding community. A detailed inspection of the complex is currently being conducted, in conjunction with the local emergency services and Utah Department of Transportation.
Rio Tinto is working with the Government of Mongolia to ensure Oyu Tolgoi is operating in accordance with the restrictions the Mongolian authorities have put in place to contain the spread of COVID-19. The first priority of the Rio Tinto and Oyu Tolgoi teams is the health and safety of all of our employees, contractors and the wider community.