RIO - Rio Tinto Group

NYSE - NYSE Delayed Price. Currency in USD
54.62
+0.43 (+0.79%)
At close: 4:02PM EST

51.20 -3.42 (-6.26%)
Pre-Market: 6:14AM EST

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Previous Close54.19
Open54.30
Bid0.00 x 800
Ask51.48 x 1000
Day's Range53.98 - 54.71
52 Week Range47.88 - 64.02
Volume2,570,176
Avg. Volume1,429,975
Market Cap92.147B
Beta (5Y Monthly)0.83
PE Ratio (TTM)6.85
EPS (TTM)7.97
Earnings DateN/A
Forward Dividend & Yield3.02 (5.57%)
Ex-Dividend DateAug. 07, 2019
1y Target Est51.84
  • Markets Are Waking Up to the Virus Reality
    Bloomberg

    Markets Are Waking Up to the Virus Reality

    (Bloomberg Opinion) -- Sharp falls in Asian markets and U.S. stock futures Monday suggest investors are starting to catch up to the disconnect between the coronavirus’s widening impact and hopes of a V-shaped recovery.It’s a gap that has been particularly visible in metals. China, where much of the economy remains in lockdown, accounts for about half the world’s appetite for materials from iron ore to copper. That makes the sector highly vulnerable to a coronavirus-induced slowdown, and a helpful gauge of how well the reality of economic activity is being reflected in financial markets. The answer? Not enough.While some larger mills and smelters are working, disrupted transport and absent workers mean physical demand is in the doldrums. Domestic inventories of everything from steel to copper are high. Bloomberg Economics calculated last week that the world’s second-largest economy was running at 50-60% of capacity in the week ended Feb. 21. That is better than the week before and could well improve over the coming days. Still, it’s a level that seems hard to square with the way shares in miners such as BHP Group, Rio Tinto Group and others have been trading.Almost all major mining stocks bounced back after February lows, with BHP and peers falling below that only on Monday. They remain well above their troughs last year, when concerns over the U.S-China trade war rattled the market. Even copper futures on the London Metal Exchange, a reflection of confidence in the global economy rather than just physical demand, have rebounded.It’s not that investors are brushing off risk. There’s evidence of nervousness to be found in haven assets like gold, which last week broke through $1,600 an ounce. Yields on long-dated U.S. Treasuries have tumbled. More pessimistic commentary is also emerging from company executives.Investors appear to have been betting on three things. First, that the virus will be contained in the coming weeks. Second, that Beijing will unleash hefty fiscal and monetary stimulus. Finally, that demand impacted by the virus will be deferred, and not simply lost. Unfortunately, none of these things is certain. For metals and the resilient equity valuations of their producers, the coming days will be critical, as it becomes clear just how many workers emerge from quarantine and how much the Chinese government’s push to restart production is paying off. So far, the number of people on any form of transport is still a fraction of where it was a year ago, according to Bloomberg Economics.There are risks even if people do return. It’s much harder for face masks and hand sanitizer to offer protection in construction projects, which may well push back the start of the spring season, hurting steel and ingredients like iron ore. Domestic prices for steel used in manufacturing and building are still at their lowest in almost three years. BHP, which expects Chinese real GDP growth of around 6% for 2020, said last week that it would revise its forecasts lower if construction and manufacturing don’t return to normal in April.So how does that square with what equity investors are pricing in? The hope for a hefty stimulus from Beijing, which underpins much of the equity market’s buoyancy for miners and beyond, seems broadly to match what China has already said and done. There is already monetary easing and other forms of support, from help with social security payments for small companies to busing in workers in some provinces. But it’s still unclear what shape the bulk of the fiscal stimulus will take and how heavy it can be in sectors such as property, where the government remains wary of bubbles. China is also well aware that splurging on debt to get the economy moving will mean pain in the not-too-distant future. That creates plenty of uncertainty.The other two assumptions are even more problematic.Whether China can contain the virus will be hard to tell for some time, not least given Beijing’s changes to the way cases are reported. It’s unclear what will happen once sealed-off areas begin to open, given epidemics can have more than one peak. Mass quarantines at this scale are also untested in the age of supply chains. Assuming everything bounces back swiftly is optimistic. The emergence of substantial clusters outside Hubei and indeed beyond China — in South Korea, Iran and Italy — is worrying.Then there’s demand for everything from washing machines to takeaway coffee and bigger-ticket items like cars, where sales have dropped 92% in the first half of February. It’s unclear how much will be pushed back. The underlying economic uncertainty is greater than during the severe acute respiratory syndrome outbreak in 2003, when growth rebounded quickly.That all makes mining stocks and the wider equity markets look a little lofty. During SARS, Hong Kong’s market fell almost a third from its 2002 high to the trough of 2003. This time, the Hang Seng Index, admittedly with different components, is down just 6% from its pre-virus 2020 high, as of Friday. It may all blow over. For now, the risks are to the downside. To contact the author of this story: Clara Ferreira Marques at cferreirama@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis 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 appoints three women as non-executive directors
    The Guardian

    Rio Tinto appoints three women as non-executive directors

    Rio Tinto appoints three women as non-executive directors. Mining group had one of the least gender diverse boardrooms of world’s biggest companies

  • How an Iron-Ore Billionaire Escapes ESG Scrutiny
    Bloomberg

    How an Iron-Ore Billionaire Escapes ESG Scrutiny

    (Bloomberg Opinion) -- Australia’s richest man Andrew Forrest cherishes his reputation as one of the good guys. That makes his intimate involvement in one of the world’s most polluting industries a problem.The founder of the world’s fourth-biggest iron-ore miner Fortescue Metals Group Ltd. has done spectacularly well from riding the Chinese steel boom of the past two decades. Net income at Fortescue increased nearly fourfold to $2.45 billion in the first half of the year, the company said Wednesday, delivering A$828 million ($554 million) of interim dividends to Forrest and Minderoo Group Pty., which he controls. The financial bonanza has been blessedly free of the scrutiny that ESG-focused investors such as BlackRock Inc. and Norges Bank Investment Management have devoted to thermal coal in recent months.That's rather remarkable. For all the attention on thermal coal, producing a metric ton of steel in a blast furnace releases almost as much carbon as burning a ton of coal for energy. Globally, the steel industry accounts for about 2.8 billion metric tons of annual emissions, compared to 10.1 billion tons for thermal coal. The world’s major iron ore producers are responsible for some of the largest volumes of end-use emissions globally, equivalent to those of the very biggest independent oil companies.While Fortescue doesn’t disclose such Scope 3 emissions (unusual for a company that values its reputation for responsible business practices), a back-of-the-envelope calculation suggests it accounts for around 250 million tons of carbon pollution each year. That puts the company somewhere between Rosneft Oil Co. and Glencore Plc. The 35% stake held by Forrest and Minderoo equates to annual emissions similar to those from the entire country of Bangladesh.How have steelmakers and iron miners evaded the attention of climate-focused investors? A large part of the explanation may be the perception that there’s no alternative to carbon-intensive blast furnaces to provide the world’s steel needs, rendering measures to reduce this emissions burden futile. That’s increasingly not the case, though. Electric arc furnaces making recycled metal from scrap have swept through the U.S. steel industry in recent decades to push dirtier blast furnaces aside. The same technology can be adapted to make non-recycled steel, too, and using hydrogen to burn off the oxygen from iron ore can potentially almost entirely decarbonize the steelmaking process.Swedish steelmaker SSAB AB this month announced plans with miner LKAB AB and utility Vattenfall AB to develop just such a fossil-free steel plant. While the product would cost 20% to 30% more than traditional blast furnace steel, it would be competitive at a carbon price of 40 euros ($43) to 60 euros a metric ton, according to a 2018 study — not that much more than current prices of around 25 euros in Europe’s carbon market. That would look still more attractive if falling prices for renewable electricity and hydrogen, plus wider deployment of electric furnaces, further drove down costs.Forrest is in a unique situation to push miners, steelmakers and governments to accelerate this transition. Unlike the boards and management of BHP Group, Rio Tinto Group and Vale SA, he’s the founder and chairman of his company and has a dominant shareholding.Forrest has made similar stands in the past. When he found at least 12 suppliers employing forced labor — an obvious conflict with his campaign against modern slavery — he promised to drum them out of business if they didn’t change.To date, that same principled approach hasn’t extended to the role that Fortescue and its customers play in climate change. Despite donating A$70 million to aid recovery from the bushfires which have swept Australia in recent months, he’s vacillated between citing the role of global warming in the disaster, repeating bogus claims that arson played the “biggest part” in the fires, and making questionable arguments around reducing forest litter.Pressed repeatedly in an interview with CNN last month to clarify what more he could be doing, he denied, implausibly, that the mining industry had “lobbied hard” against climate policies and said that “the science has to be done” on how to mitigate the fires. In a subsequent article for the Sydney Morning Herald, Forrest said that climate change is real and is intensifying natural disasters.Fortescue is unusually well-placed to benefit from any shift in the steelmaking industry toward a lower-carbon route. The big loser from a move away from blast furnaces would be coking coal — but unlike BHP and Vale, Fortescue doesn’t produce any. Its iron ore is of lower quality than its larger competitors, so would have most to gain from being upgraded to the iron briquettes that would be consumed by electric primary steel mills. Forrest has invested A$20 million to develop hydrogen export capacity for Australia. Using that gas for upgrading ore would represent a much better use of the technology.The risk for iron ore miners like Fortescue is that they’re betting everything on the odds that blast furnaces continue to dominate global steel production. With demand approaching a plateau, a glut of Chinese scrap looming, and rising attention on industrial carbon emissions, that’s no longer such a sure thing. A decade ago, miners were similarly full of confidence that wind and solar power could never supplant the role of thermal coal in electricity generation. How did that prediction turn out? (Corrects the second paragraph of column first published Feb. 19 to show that Minderoo Group Pty. is the entity that receives dividends; clarifies Forrest’s position on climate change in the 12th paragraph.)To contact the author of this story: David Fickling at dfickling@bloomberg.netTo contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.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.

  • Business Wire

    Rio Tinto board changes

    Rio Tinto will appoint three new independent non-executive directors to the board.

  • Rio Tinto seeks international arbitration on tax dispute with Mongolia
    Reuters

    Rio Tinto seeks international arbitration on tax dispute with Mongolia

    Rio Tinto is already stuck in renegotiations over terms of the agreement underpinning the Oyu Tolgoi copper mine project, as local lawmakers contend that financial gains from the project are not being evenly shared with Mongolia. The project is Mongolia's biggest foreign investment and has been subject to lengthy delays and ballooning costs, leaving the country's lawmakers impatient for income. Meanwhile, Rio Tinto says it has invested billions.

  • Business Wire

    Oyu Tolgoi to pursue international arbitration

    Rio Tinto announces that Oyu Tolgoi LLC (Oyu Tolgoi) has initiated a formal international arbitration process to seek a definitive resolution with regard to a dispute with the Mongolian Tax Authority (MTA), concerning taxes paid by Oyu Tolgoi between 2013 and 2015.

  • Fires and climate fears rattle Australia's giant coal lobby
    Reuters

    Fires and climate fears rattle Australia's giant coal lobby

    As bushfires and floods fuel public concerns in Australia about global warming, the country's powerful mining lobby is facing increasing pressure from investors to drop support for new coal mines, according to a dozen interviews with shareholders in global mining companies. Nearly a third of shareholders in BHP Group Ltd , the world's biggest miner, last year voted for resolutions to axe its membership in industry groups advocating policies counter to the Paris climate accord, which aims to limit global warming to "well below" 2 degrees Celsius.

  • INSIGHT-Fires and climate fears rattle Australia's giant coal lobby
    Reuters

    INSIGHT-Fires and climate fears rattle Australia's giant coal lobby

    As bushfires and floods fuel public concerns in Australia about global warming, the country's powerful mining lobby is facing increasing pressure from investors to drop support for new coal mines, according to a dozen interviews with shareholders in global mining companies. Nearly a third of shareholders in BHP Group Ltd , the world's biggest miner, last year voted for resolutions to axe its membership in industry groups advocating policies counter to the Paris climate accord, which aims to limit global warming to "well below" 2 degrees Celsius.

  • Bloomberg

    BHP Can Afford to Go a Lot Greener

    (Bloomberg Opinion) -- Mike Henry has kicked off his tenure at the helm of the world’s largest miner with a 29% increase in first-half earnings. That laudable result was fueled by iron ore, a steelmaking ingredient. BHP Group’s promised climate targets remain a work in progress. It’s a striking contrast with BP Plc’s Chief Executive Officer Bernard Looney, who started in the top job this month with a green splash. BHP would do well to seize the initiative as details unfold in the critical months ahead.Looney and Henry are, in a way, brothers in arms. Both are company veterans, at the top of $120 billion-plus resources heavyweights. Both took over this year from chief executives who came in to tackle crises, and start in a better financial position than their predecessors. Both are trying to juggle competing demands for stable production, generous payouts and the need to prepare for a carbon-light future. For both, that’s how success will be measured.The bar is low in the resources industry, which has long avoided tackling its responsibilities for the grim reality of a warmer climate. In that context, BHP and BP are both ahead of the pack. Melbourne-based BHP said last year it would hit net zero greenhouse gas emissions by 2050 for its own operations, and announced it would begin to tackle carbon produced by its customers. It had already said 2022 emissions from its mines and wells would be at or below 2017 levels. Plus, the Australian company plans to tie executive compensation more closely to climate goals. London-based BP, meanwhile, has set net-zero targets by 2050 for a wider set of emissions, partly encompassing its supply chain. Only Spain’s Repsol SA, far smaller, has been more ambitious.Lofty vision is the easy bit. Assuming they stay in place as long as their predecessors, Henry and Looney will preside over a decade that will determine the success or failure of efforts to address climate change. They, and their companies’ stock valuations, will stand apart if their efforts help investors price risk appropriately, and shed light on the future shape of the companies. Details matter more than early headlines. That means clear, measurable targets for all categories of emissions. It means a plan for fossil fuel-heavy portfolios. It means a commitment to justify spending decisions with green goals in mind, as BP and Glencore Plc have agreed to do. It’s a gargantuan challenge. First, because investors want everything: bumper earnings, hefty dividends and a future-proof business. That may not be possible. BHP’s interim figure Tuesday already disappointed some.Then, consider much of the environmental damage is done beyond the mine gate, and is therefore harder to control. For BP, those wider emissions amount to just under 90% of the total. For BHP, it’s even worse: For the 2019 financial year, it said the processing of non-fossil fuel commodities added as much as 305 million metric tons of carbon dioxide equivalent, and fossil fuel use added up to 233 million. There’s some double counting here, so the figures can’t be combined, but Australia’s total, for comparison, was just under 540 million metric tons for the year through March 2019.That means credible efforts to turn BHP’s operations greener, like the use of electric cars at its Olympic Dam project in Australia or the move to renewable energy at the Escondida copper mine in Chile. While welcome, such moves aren’t sufficient. The same goes for a $400 million, five-year climate investment program.The task over the coming months will be to come up with with measurable ambitions for the short, medium and long term, for both operational emissions and beyond. Those will need to link back to remuneration packages that also tie executives in for longer.In tandem, Henry will have to tackle BHP’s portfolio. The former head of BHP’s Minerals Australia arm said Tuesday that he wanted more options in “future facing” metals, specifically copper and nickel, used in wind turbines, solar power and rechargeable batteries. That’s encouraging, but competition is tough and scale may be smaller than the miner would prefer. Henry will also have to make a decision on the company’s Jansen potash project in the coming months.The remaining assets are a pricklier problem, including the future of oil and coal. BHP has lagged behind rivals like Rio Tinto Group, which sold its last thermal coal mine in 2018. Buyers for its thermal assets, including Mount Arthur Coal and a third of Cerrejon in Colombia, are proving scarce. It may not want to make the same mistake with metallurgical coal, even if for now margins are sounder, and substitution is difficult.All of this needs to be done against a challenging background for the commodities industry, buffeted by the coronavirus epidemic sweeping China, the world’s biggest importer of coal, iron ore and oil. BHP, with a lucrative copper business and a healthy balance sheet, has options. Henry can afford to be bold. To contact the author of this story: Clara Ferreira Marques at cferreirama@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis 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.

  • Business Wire

    Rio Tinto progresses Oyu Tolgoi power options

    Rio Tinto progresses Oyu Tolgoi power options

  • Business Wire

    Rio Tinto: Update on Tropical Cyclone Damien

    Rio Tinto’s iron ore operations in the Pilbara, Western Australia, are progressively resuming following the passing of Tropical Cyclone Damien. The cyclone caused infrastructure damage across our entire Pilbara network, including impact to access roads, electrical and communications infrastructure and accommodation. All mine sites experienced some disruption and will take time to return to normal operations.

  • Business Wire

    Rio Tinto to build first solar plant in Western Australia to power iron ore mine

    Rio Tinto has approved a $98 million (100 per cent basis) investment in a new solar plant at the Koodaideri mine in the Pilbara, Australia, as well as a lithium-ion battery energy storage system to help power its entire Pilbara power network.

  • Iron Ore’s Brazilian Rain Dance Looks Premature
    Bloomberg

    Iron Ore’s Brazilian Rain Dance Looks Premature

    (Bloomberg Opinion) -- Good news has been in short supply for iron-ore markets since China began shuttering swathes of the economy to contain the coronavirus outbreak. Prices gained after Vale SA offered a thin salve Tuesday, saying first-quarter output will be lower than previously anticipated because of heavy rains in Brazil. The market may be cheering a little too soon.Iron-ore supply was supposed to return to normal this year, after 2019 was marked by disruptions including a fatal accident at one of Vale’s dams and a tropical cyclone in Australia. The Brazilian heavyweight and Rio Tinto Group, which vie to be the world’s biggest shipper of the steelmaking ingredient, both plan to increase production. The prospect of higher supply was reflected in Australia’s quarterly forecasts, published in December, which saw prices easing to $60 per metric ton by 2021 — more than a fifth below 2019’s elevated average.The coronavirus epidemic has accelerated that trend by slashing demand in the world’s largest consumer of iron ore, pushing prices in Singapore below $80 by early February.The picture isn’t encouraging. China’s return to work is proving gradual, even with official encouragement. Wuhan, the epicenter of the outbreak, accounts for about 2% of Chinese steel production, according to Bloomberg Intelligence. Some mills are working, but downstream demand has been hit across the country. Iron-ore stockpiles are building at China’s ports. Inventories of rebar, a benchmark for steel used in building work, stand at their highest level for early February since 2012. Carmakers also expect a production and sales hit: About 70% of dealers polled by the local industry association said earlier this week they had seen almost no customers since the end of January. Worse, the country’s role in global supply chains means there will be ripples.All of this will still be fine in the long run if two things happen next: first, if supply eases alongside demand; second,  if China regains its appetite fast, perhaps aided by stimulus.The trouble for the market is that the current iron-ore price appears to have built in both assumptions. Optimism around the incremental number of virus cases, combined with Vale’s outlook, means Singapore futures are now down about 9% from when the epidemic began to look serious in mid-January. Domestic futures on the Dalian exchange have risen for two consecutive days, alongside stocks in steelmakers, cement companies and developers, encouraged by comments from President Xi Jinping.The output picture does offer some hope. There is consolation in Vale’s rain-hit first quarter, and indeed minor disruption around Cyclone Damien in Australia. Vale’s full-year output target of 355 million tons involves assumptions around permits that could yet see delays. Yet Rio Tinto, BHP Group and others expect higher output in 2020. Chinese production may also be less sensitive to weaker prices than it once was, ticking higher despite the virus.Demand is  harder to forecast. There will be fits and starts, and the long incubation period for the novel coronavirus makes its path far harder to predict outside Wuhan and the surrounding province of Hubei. Supply chains will take months to repair even if the virus is contained.The biggest unknown is the shape of China’s post-virus stimulus. Undoubtedly, it will lean on infrastructure, but that will take time to feed through. And don’t expect a repeat of the swift post-SARS recovery — in 2003, China was on an expansion path. That was also the case during the global financial crisis, when China splurged the equivalent of $586 billion on bridges and the like.China in 2020 has to weigh the need to crank up growth, with the end of its current five year plan looming, against the risks of causing a further buildup of debt and creating property bubbles. Infrastructure and construction, which traditionally account for most of China’s steel and iron ore consumption, may benefit far less than in past crises. Much will become clear after the legislature’s annual meeting in March (assuming it goes ahead on schedule). A sugar rush may well be on the way; it just may not be sweet enough. To contact the author of this story: Clara Ferreira Marques at cferreirama@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis 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.

  • Business Wire

    Rio Tinto to review future of ISAL smelter

    Rio Tinto will conduct a strategic review of the ISAL smelter in Iceland, to determine the operation’s ongoing viability and explore options to improve its competitive position.

  • Singapore Braces as Coronavirus Cases Emerge in Finance Hub
    Bloomberg

    Singapore Braces as Coronavirus Cases Emerge in Finance Hub

    (Bloomberg) -- Singapore’s coronavirus outbreak has spread to its financial center, with some staff at major companies being told to work from home for at least the next few days and temperature screening checkpoints set up at the front doors of several towers.A worker at an unnamed firm in Marina Bay Financial Centre Tower 1 has been confirmed as being infected with the virus over the weekend, according to a circular to tenants by the building’s manager Raffles Quay Asset Management Pte. Another case at nearby Clifford Centre, in the heart of the central business district, is an employee of United Industrial Corp, according to an advisory to tenants in the building where UIC is located.The affected premises in both buildings have been disinfected and all tenants informed, the property managers said in the notices dated Feb. 9.Singapore last week raised its disease response level to the same grade used during the SARS epidemic, as it braced for what Prime Minister Lee Hsien Loong said was a “major test for our nation.”There are 45 confirmed cases of coronavirus in Singapore -- the largest number of infections outside China, excluding a quarantined cruise ship in Japan. Of the total, 23 cases are locally transmitted infections, according to the city-state’s health ministry. Seven people have fully recovered from the infection and been discharged from hospital, while seven are in critical condition.The city-state has cautioned residents to avoid shaking hands in a bid to contain the spread of the virus. Panic buying had sparked a run on toilet paper, rice and instant noodles in stores, echoing scenes of long lines and bare shelves seen last week in Hong Kong and mainland China. Government officials warned against hoarding supplies, while the Monetary Authority of Singapore told banks to be prepared for an increased demand in cash withdrawals.Read how virus fallout from Singapore conference spreads across EuropeBusiness Continuity PlansStandard Chartered Plc is the anchor tenant at Tower 1, leasing the lion’s share of the 33-story building that has 620,000 square feet. The U.K. bank declined to comment whether the virus case comes from among its employees.“We have a well-established business continuity plan and implemented a comprehensive set of precautionary measures such as temperature screening, mandatory employee and visitor declarations, and increased the frequency of sanitization at our branches and office premises,” the bank said in an emailed reply to queries from Bloomberg.DBS Group Holdings Ltd, Southeast Asia’s largest bank with headquarters in the nearby MBFC Tower 3, has activated business continuity plans with employees working from home and from other locations, on top of other measures that include temperature screening on all its office buildings, the bank said in an emailed reply to questions from Bloomberg News.Rio Tinto Group, Australia’s top iron-ore miner that’s also located in Tower 3, said that it has instructed employees to work from home from Monday through to Wednesday “as a precaution.” Its Singapore office is one of its key hubs outside of Australia.United Overseas Bank Ltd. said it has activated its business continuity plans, having staff working from split sites, from home and on split shifts. Singapore’s third-largest bank also postponed all large-scale public gatherings including customer events.A spokesperson for Raffles Quay Asset Management said the building manager has stepped up precautionary measures at its buildings including temperature screening, more frequent cleaning in common areas and toilets, and deployment of hand sanitizers.(Updates with number of infections in fifth paragraph)\--With assistance from Ruth Carson and Stephen Stapczynski.To contact the reporters on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net;Faris Mokhtar in Singapore at fmokhtar1@bloomberg.net;Krystal Chia in Singapore at kchia48@bloomberg.netTo contact the editors responsible for this story: Joyce Koh at jkoh38@bloomberg.net, Derek Wallbank, Stephanie PhangFor 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.

  • Is Rio Tinto (RIO) A Suitable Pick for Value Investors?
    Zacks

    Is Rio Tinto (RIO) A Suitable Pick for Value Investors?

    Is Rio Tinto (RIO) a great pick from the value investor's perspective right now? Read on to know more.

  • Business Wire

    Rio Tinto Supports China’s Fight Against Novel Coronavirus Outbreak

    Rio Tinto has donated US$1 million to the Chinese Red Cross Foundation to contribute to China’s nationwide medical effort to support those impacted by the novel coronavirus outbreak.

  • Business Wire

    Rio Tinto launches new Australian payment terms

    Rio Tinto will immediately begin transitioning small Australian suppliers to shorter payment terms that will see them paid within 20 days of receipt of a valid invoice. This move, which will apply to suppliers with annual turnover up to A$10 million, reflects Rio Tinto’s recognition of the importance of ensuring smaller suppliers, whom are often local to its Australian operations, are paid in a timely manner.

  • The Race Is On for Iron Ore Riches Buried Under an African Jungle
    Bloomberg

    The Race Is On for Iron Ore Riches Buried Under an African Jungle

    (Bloomberg) -- For years, the massive iron deposits under Guinea’s mountainous jungle were practically forgotten by the mining industry. Caught up in wrangles between owners and authorities in the West African nation, it seemed the super-rich ore might never be dug up. That all changed last year, as investors from billionaire promoter Robert Friedland to legendary dealmaker Mick Davis converged on the country in a modern day resource rush. For the first time in years, projects like Simandou—Guinea’s crown jewel deposit—might finally be developed.That would have huge implications for both Guinea, which is facing political upheaval as President Alpha Conde pushes for a third term, and the global iron ore industry. The new tons threaten to arrive just as steel demand is cooling, and the high-quality iron ore buried in Guinea will pile pressure on existing miners.Here’s a run-down on the biggest names circling Guinea’s iron ore riches: The Bauxite Tycoon:  Fadi WazniThe story: Wazni is chairman of the SMB-Winning consortium, a group that’s rapidly developed a bauxite mining business in Guinea in just half a decade. It’s won the right to develop parts of Simandou, but it will require a lot of money to make it happen.The plan: The group plans to eventually mine 100 million tons a year—making Guinea the world’s third-biggest iron ore shipper, behind just Australia and Brazil. The plan will require spending of $14 billion.The catch: An initial $8 billion project, including a 650-kilometer railway stretching across the country, still needs to be financed. Nonetheless, Wazni says the company plans to start work on the rail as soon as April and is in talks with partners for funding. “The SMB consortium have transformed the bauxite market in a matter of two years,” said Tyler Broda, an analyst at RBC Capital Markets. “This is a big deal. This is something that can significantly change the dynamic for iron ore.”The Mining Legend: Mick DavisThe story: The former Xstrata CEO was one of mining’s most successful operators and dealmakers, but struggled to re-establish himself since selling to Glencore Plc. The plan: Davis’s Niron Metals is studying development of the Zogota iron ore mine, a smaller project that could produce about 20 million tons a year. An assessment of the mine’s economic viability is expected to be completed soon.The sweetener: Davis has already agreed on an export route through Liberia with both governments.“Mick’s involvement rang a bell,” said Marcos Camhis, whose private equity fund owns 25% of Niron. “This market is now open, serious people are looking at it again.”The Billionaire Promoter: Robert FriedlandThe story: Friedland has been involved in some of the biggest mining discoveries in the past three decades. In September, Friedland’s High Power Exploration Inc. won rights to develop the Nimba deposit. The plan: HPX plans to build a “starter” mine of 1 million to 5 million tons per year as quickly as possible, while feasibility studies are being completed for an expanded operation of at least 20 million tons annually.“Mr. Friedland certainly has the track record and reputation to garner investment interest,” said Ben Davis, an analyst at Liberum. “But this will certainly be a stretch.”The Miner: Rio TintoThe story: Rio Tinto owns the other half of Simandou not controlled by SMB. The latest: Rio has begun looking at new ways to develop the mine, with a focus on options to export ore out of the country. Wazni says he’s had talks with Rio and sees it as a natural customer for his rail line.The dilemma: The SMB plans pose a challenge for Rio. A rival developing the deposit will threaten its position as one of the largest producers. Yet shareholders are unlikely to welcome any plans to pour billions of dollars into Guinea. “Rio is completely in a dilemma,” said RBC’s Broda. “It doesn’t make sense for them to put more tons into the market just to protect their market share.”To contact the author of this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.netTo contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Liezel HillFor 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.

  • The Big Dirty Secret of the World's Biggest Companies
    Bloomberg

    The Big Dirty Secret of the World's Biggest Companies

    (Bloomberg Opinion) -- Lots of companies talk a good game about cutting planet-heating greenhouse emissions but their disclosures and targets have tended to focus on the emissions over which they have direct control and which are easiest to measure. That’s fine in an industry such as cement, where the bulk of carbon pollution occurs during the production process. From an environmental perspective these direct, or “Scope 1,” emissions are the main problem caused by these particular companies.But the approach falls down in companies working in oil, mining, carmaking, finance, and even fashion, because oftentimes most of their carbon footprint is contained in the products they sell or help finance — not their own operations.An oil giant can boast all it likes about how it’s reduced gas flaring; if car drivers are still filling up with its gasoline, the planet will keep getting hotter. The same goes for an iron ore producer that touts how its mining trucks are incredibly fuel efficient but whose main product is the basis for steel production. Luxury goods suppliers may run the greenest workshops imaginable, but use fabrics and materials that are deeply damaging to the planet.In the past, so-called “Scope 3” emissions — the pollution contained in products sold to customers or in goods and services purchased from suppliers — either weren’t calculated or were seen as someone else’s problem. Thanks to pressure from institutional investors and activists, plus leadership from a few enlightened chief executives, corporate attitudes about this subject are evolving fast. “Scope 3 is the elephant in the room,” Mark van Baal of investor advocacy group Follow This told the Norwegian oil major Equinor ASA’s annual meeting last year.The new impetus is welcome because unless companies try to reduce the environmental damage of their products and purchasing decisions, efforts to limit catastrophic climate change will fail. At the World Economic Forum in Davos last week the bosses of some of the world’s biggest oil producers debated setting targets for Scope 3 emissions, which typically make up about 90% of their carbon footprint. BP Plc’s new boss Bernard Looney is poised to abandon his predecessor Bob Dudley’s opposition to targeting customer emissions, according to Reuters. Royal Dutch Shell Plc, Repsol SA and Total SA have already set Scope 3 targets.In mining, Rio Tinto Plc argued it had “very limited control” over customer emissions but later bowed to pressure by promising to work with its customer (and China’s top steel producer) Baowu Steel Group on lowering the steel sector’s emissions. BHP Group Ltd. and Vale SA have gone further by promising to set goals for Scope 3 emissions. In BHP’s cases these are almost 40 times greater than its direct pollution.The European Union’s new guidelines on climate reporting also recommend that large companies disclose customer and supplier emissions. Banks and insurers, whose direct emissions are typically pretty negligible, should focus on their counterparties’ emissions, the guidelines say. Unfortunately, this is not yet legally binding.Reluctance to target this stuff is hardly surprising because the numbers can be huge. Volkswagen AG acknowledged last year that its vehicles are responsible for about 2% of all the CO2 produced by humans.(3)Among the largest Scope 3 polluters are companies that the public probably don’t immediately think of as big climate sinners. It’s no surprise that Shell and Petrobras make the list, but I hadn’t thought about Cummins Inc., which sells truck engines and industrial power generators, Nexans SA, whose cables transport electricity and data, and Daikin Industries Ltd, which builds air-conditioning units.I’m not knocking these companies; at least they’re disclosing these emissions and some are setting targets to reduce them. Cummins plans to reduce absolute lifetime emissions from newly sold products by 25% by 2030, for example.Calculating the emissions from sold products is a pretty complicated exercise too. ThyssenKrupp AG’s massive Scope 3 emissions include those contained in the steel in the cars we drive around, the cement plants its factory construction unit helped build and the elevators in office buildings. Daikin has to consider the probable lifespan of its air conditioners, their energy consumption and what kind of electricity they’re powered by, plus probable leakage rates of planet-heating refrigerants.Fortunately there’s no shortage of organizations and methodologies to help compile these data. (Michael Bloomberg, founder of Bloomberg News and its parent Bloomberg LP, chairs the FSB Task Force on Climate-related Financial Disclosures).Regrettably, not all large manufacturers have seen the light through the smoke. The copious sustainability reports of some companies still don’t spell out the total emissions of the products they sell. Volvo AB told me there’s no globally harmonized standard on how to calculate and disclose Co2 from heavy duty trucks, but that it’s evaluating opportunities to report on this in future. Daimler AG, which wants a completely CO2 neutral truck fleet in key markets by 2039, plans to start disclosing Scope 3 emissions for trucks in its next sustainability report.(1) You know something’s up when it takes a hedge fund to tell a company to clean up its act. The shortcomings in aircraft maker Airbus SE’s Scope 3 emissions reporting were highlighted in a critical letter late last year from Chris Hohn’s TCI Fund Management, the world’s most profitable activist fund. Airbus and rival Boeing have committed to halving the aviation industry’s net emissions by 2050. It would help focus minds on that urgent task if they fully accounted for their own role in flight pollution.(2) If Shell can do it, why not them?(1) Like other truck manufacturers, VW doesn't report Scope 3 emissions for heavy trucks but made the estimate based on its market share andthe truck sector's contribution to global emissions (plus its carbon footprint from cars)(2) It already does so for cars.(3) Boeing's environment reportonly counts Scope 3 emissions from business travel. Airbus has urged the aviation sector to develop a common methodology for Scope 3 emissions to aid consistency in reporting.To contact the author of this story: Chris Bryant at cbryant32@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.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.

  • Business Wire

    Rio Tinto’s Australian Supplier Portal

    Rio Tinto is committed to paying small and medium business suppliers with up to $1 million of annual expenditure within 30 days of receipt of invoice. This is in line with the Australian Supplier Payment Code.

  • The Horse Breeder, the Novelist and the $60 Billion Mine
    Bloomberg

    The Horse Breeder, the Novelist and the $60 Billion Mine

    (Bloomberg) -- Australia has some big decisions to make about its future. For insight into the stories that matter, sign up for our new weekly newsletter.John Kuhns has been many things: an investment banker, a silicon smelter operator in China and a novelist. His sights are now set on an abandoned mine with an estimated $60 billion of gold and copper.Kuhns is among a handful of people exploring for minerals and courting landowners on the Pacific island of Bougainville. His rivals include an Arabian-horse breeder, a hedge fund investment manager who keeps wallabies on his estate and a former Australian defense minister.The involvement of such an eclectic mix of entrepreneurs is a reflection of the fact that this is no ordinary mineral reserve. Rio Tinto Group operated the Paguna mine for 17 years through subsidiary Bougainville Copper Ltd. The global mining behemoth shut it in 1989 as local protests over mine revenue degenerated into a civil war that killed as many as 20,000 people.The mine has been in limbo ever since. But that may be about to change as the Autonomous Region of Bougainville moves toward independence from Papua New Guinea after a referendum showed an overwhelming majority of the population on the small group of islands wants to establish a new nation.While the political uncertainty may deter major mining companies from making an immediate investment, the mine’s riches attract entrepreneurs hoping to develop the asset to a point where they can deliver it to a big operator for a fee, said Peter O’Connor, a Sydney-based analyst at Shaw and Partners Ltd. “They have to create a story with a vision,” he said.Success will depend on earning the trust of thousands of poor, customary landholders, many of whom remember the civil war that was triggered by communities demanding greater compensation from the mine.“The landowners want to reopen the mine but they are divided by the interested developers,” said Sam Akoitai, a member of the island’s parliament who represents central Bougainville, an area that includes Panguna. “It’s really up to the landowners to come together to understand that the land belongs to the clan and not to some individuals.”Bougainville Copper, which is no longer associated with Rio, has estimated it would take seven to eight years and $5 billion to $6 billion to rebuild the mine and resume full operations. The company is blamed by many locals for contamination attributed to the mine.“We retain strong levels of support among customary landowners within the project area,” Bougainville Copper said in a statement. “We have a trusted local team on the ground that continues to engage with project area communities.”The Bougainville Mining Act 2015 strengthened landowner control and was designed to increase compensation to local communities and the island’s government from future mining to avoid a repeat of the bloodshed of the 1980s and 1990s. The government also decided not to renew Bougainville Copper’s exploration license, which the company is challenging in court.In June 2019, Kuhns flew several landowners to the U.S. to meet potential investors, including representatives from Barrick Gold Corp. At the Harvard Club in Midtown Manhattan, where stuffed moose, bison and even an elephant head adorn the rooms, the landowners heard Kuhns deliver a PowerPoint presentation introducing potential investors to Bougainville.Barrick declined to comment.“Panguna mine can be rejuvenated and can be resuscitated for a couple of billion dollars,” said Kuhns in a follow up phone interview. “It’s going to take a major to do that.”Among those also interested in Panguna is Jeff McGlinn, who made his fortune in mining and construction services through Western Australia-based NRW Holdings Ltd., which he co-founded. McGlinn, who resigned from NRW in 2010, is part of the glamorous world of Arabian horse breeding, mixing with models and celebrities at parties on the French Riviera and promoting luxury brands. He once gave an Arabian colt to Italian opera singer Andrea Bocelli.McGlinn’s roots in mining give him valuable experience for Panguna -- one of NRW’s businesses was constructing dams that hold mining waste. He’s also linked to a recent effort by the island’s government to kick start development, when it created Bougainville Advance Mining. The government’s Executive Council proposed last year an amendment to the 2015 mining act that would give all available mining rights to the new company, in which McGlinn’s Caballus Mining would hold a stake.That amendment drew criticism from landowners, as well as Bougainville Copper, the former mine operator, which says the proposal undermines its rights to mine Panguna. The bill was later shelved. A representative of Caballus said McGlinn was unavailable to comment.Another interested party is Richard Hains, son of the Australian billionaire David Hains. Richard, famous for keeping wallabies on his Gloucestershire estate, has helped develop mines in some of the world’s most difficult places. He’s the largest shareholder of RTG Mining Inc., whose management team has financed, built and operated mines across Africa and Asia, including the Boroo gold mine in Mongolia.“Some of the best opportunities in the mining business in the 21st century are now in the more difficult commercial environments,” Hains said in a phone interview.RTG believes it can restart production at Panguna through a staged process in as little as 18 months for about $800 million.“It’s far smarter to start with a smaller footprint,” said RTG Chairman Michael Carrick. “Then in consultation with the community, we can turn up the mine’s operation.”RTG operates a joint venture with the Special Mining Lease Osikaiyang Landowners Association, a Panguna landowners group. The JV employs 15 people, including Philip Miriori, the chairman of the landowners group.Why a Part of Papua New Guinea Is Eyeing Independence: QuickTakeThere are bigger fish too. Fortescue Metals Group Ltd. said in an emailed statement it has sent representatives to Bougainville to learn about the region and potential opportunities, confirming earlier reports. Founder Andrew Forrest is Australia’s second-richest person with a $10.2 billion fortune, according to the Bloomberg Billionaires Index.Shaw and Partners’ O’Connor said Chinese miners may also have a chance of redeveloping Panguna because they have a greater risk appetite and access to cheap financing.But the Panguna landowners group Chairman Miriori said the people he represents aren’t interested in working with Chinese developers because of their poor environmental track record.If anyone wins the right to develop Panguna or other parts of the autonomous region they will need to do so cautiously. Violence remains a constant threat in a community that is still fiercely divided.A geologist working for Perth-based Kalia Ltd. was killed and seven others were injured in an attack in northern Bougainville in December, according to the local government and the company, whose chairman is former Australia Minister forDefence David Johnston. Authorities subsequently suspended Kalia’s exploration expeditions and geological field work.There’s also a moratorium on work at Panguna because of sensitivity to restarting the mine, said Raymond Masono, Bougainville’s vice president and minister for mineral and energy resources.“We are no longer talking with any investors about Panguna until the moratorium is lifted, and we don’t know when” that will be, he said by phone. “The government is treading very carefully on this particular mine.”Bougainville Copper lost 5% to close at 28.5 Australian cents in Sydney trading on Tuesday.But prospects for restarting Panguna and allowing for the development of new mines are bolstered by the idea that Bougainville would need revenue to have any chance of financing an independent state. Many hope the mineral wealth could ultimately help reduce poverty for the region’s 300,000 people where estimated per capita GDP is only about $1,100.That would depend not only on clearing the way to restart production, but a government able to make sure that enough of the proceeds are used to fund development. “Given the failure of mining in PNG to deliver really anything like sustainable development, those hopes may end up being disappointed,” said Luke Fletcher, executive director of Jubilee Australia, a group that has tracked the effect of resource extraction.But the lure of riches mean miners aren’t likely to give up.“Bougainville had almost no exploration for nearly 40 years,” said Mike Johnston, executive director of Kalia. “There’s no other place like it on the planet.”(Updates with share price in 5th paragraph from end.)\--With assistance from Justina Vasquez.To contact the reporter on this story: Aaron Clark in Tokyo at aclark27@bloomberg.netTo contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Adam MajendieFor 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.

  • The Coronavirus Won’t Wreck the Commodities Market
    Bloomberg

    The Coronavirus Won’t Wreck the Commodities Market

    (Bloomberg Opinion) -- A rampaging epidemic in the country that consumes about half of the world’s metals has to be bad news for mining stocks, right?Investors are certainly making that bet. The week started with the Bloomberg World Mining Index falling the most in nearly six months, and a six-day losing streak continued Tuesday on expectations that a slowdown in economic activity will cut China’s voracious appetite for commodities.Australian shares of Rio Tinto Group fell as much as 5.9% when trading resumed after a public holiday Monday, on track for their biggest slide in three-and-a-half years. Those of iron-ore producer Fortescue Metals Group Ltd. slumped as much as 8.7% in early trading.That looks overdone. In the grip of an epidemic, it can feel like the sky is falling — but most such viruses die down in a matter of months, and people shouldn’t underestimate how much industrial stimulus Beijing will inject in the economy to keep growth on-target in the aftermath.Consider Severe Acute Respiratory Syndrome, which swept through southern China and east Asia in the early months of 2003. Like most coronaviruses — and indeed, most infections of the nose and throat, such as influenza — it exhibited a pronounced winter seasonality, with infections beginning in November and dropping rapidly through April, before approaching zero in June.Even Middle East Respiratory Syndrome, a coronavirus associated with parts of the world where winter weather is less extreme, showed a relatively similar pattern, with a peak in the early months of the year.Combined with this natural decline is the fact that, despite early surveillance and response lapses, China and other countries are already employing extreme measures to halt the spread. While quarantining of the entire city of Wuhan may not be sufficient — given the disease appears to have spread unchecked until it was too late — that probably won't be the last attempt to isolate the virus. China’s government, property developers and businesses are likely to implement further measures such as canceling public events and closing commercial and retail spaces.If things play out this way, it’s not impossible that the epidemic could start to subside in April, just as China’s industrial machine is revving up from its normal winter slumber. Cold weather and the long shadow of the Lunar New Year holiday typically lead to very low levels of industrial activity in January and February, before picking up to full speed between March and June.In the five years through 2018, for instance, daily pig iron production in March was about 7.4% higher on average than it was in January. Cement output ramps up even more rapidly, as warming weather makes it possible to mix concrete on building sites again: While January and February figures are often too weak to be reported by China’s statistical agency, May output over the same period averaged about 23% above the levels just two months earlier. That cycle could be particularly pronounced this year. China’s consumers are staying home during what’s traditionally been high season for shopping, dining, seeing films or traveling. A 10% fall in services consumption could cut gross domestic product growth by about 1.2 percentage points, according to S&P Global Ratings.That could, in theory, put a serious dent in output over the full year, which economists already expect to fall below the government’s target of “about 6%.” It might also violate a long-term pledge to double the country’s GDP by 2020, delivered on the eve of Xi Jinping’s accession to the Communist Party's highest leadership in 2012.Beijing is unlikely to take that sort of blow lying down. Just recall the responses to the 2003 SARS outbreak, the 2008 financial crisis, and the overzealous economic rebalancing toward consumption in 2015. As on those occasions, fixed-asset investment (particularly by state-owned companies) is likely to surge to fuel fresh industrial activity. China’s yearlong credit diet — no less serious, in its way, than the one that preceded the 2016 boom — will be loosened to inject some fresh life into a virus-hit economy.That’s likely to further defer China’s shift to an economy more dependent on consumption and less on mounting debt and carbon emissions — but it will also be bullish, not bearish, for commodities. China’s coal imports in the 12 months through June 2017 were nearly a third higher than in the preceding year; copper rose 12%, oil by 13% and iron ore by 7.7%.As the virus dies down, don’t be surprised to see that pattern play out one more time. What exactly is it about a country vowing to build two hospitals in a fortnight that makes investors think industrial commodities are heading for the sick bay?To contact the author of this story: David Fickling at dfickling@bloomberg.netTo contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.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.

  • GlobeNewswire

    American Pacific Mining Signs Letter of Intent to Purchase Broadway Gold’s Interest in the Madison Cu-Au Project Under Option with Rio Tinto

    American Pacific Mining Corp (CSE: USGD / FWB: 1QC / OTCPK: USGDF) (“APM” or the “Company”) is pleased to announce the company has signed a Letter of Intent with Broadway Gold Mining whereby it was granted the exclusive right to negotiate a definitive agreement with Broadway and certain of its subsidiaries to acquire Broadway’s interest in the Madison Copper Gold Project in Montana, USA. The project is currently subject to an Earn-In with Option to Joint Venture Agreement (the “Earn-in Agreement”) with Kennecott Exploration Company, part of the Rio Tinto Group (ASX, LON: RIO), as announced by Broadway on April 30, 2019 (a link to the press release can be found here http://tiny.cc/dz2siz). Kennecott Exploration Company is not a party to the Letter of Intent or the proposed transaction between APM and Broadway.

  • Vale Will Keep Paying for Its Dam Disasters
    Bloomberg

    Vale Will Keep Paying for Its Dam Disasters

    (Bloomberg Opinion) -- A year ago, I sat with Vale SA’s then-Chief Executive Officer Fabio Schvartsman in Davos, sipping lukewarm coffee. He chatted amiably about the next stage of the turnaround at the Brazilian mining giant, unaware that within 24 hours a river of sludge from one of his dams would take 270 lives in the town of Brumadinho. This week, he was among executives and former employees charged with homicide.The disaster on Jan. 25, 2019, a human and environmental catastrophe that’s been compared with BP Plc’s Deepwater Horizon oil spill, was supposed to be a moment of reckoning. It was, after all, Vale’s second such accident in just over three years. Yet 12 months on, shares in the $70 billion group are back at pre-Brumadinho levels, pointing to something less dramatic. The rebound also suggests investors are struggling to grasp the painful longer-term costs of such accidents for the company and the industry, in the era of stakeholder capitalism.The dam at the Corrego do Feijao mine was a problem from the beginning. It dated back to 1976, when it was started by a company later acquired by Vale. The dam was built over decades, using the tailings, or mining waste. New layers were added on top of old ones, until 2013. Unfortunately, such dams require water to drain out if they are to remain stable; the technical investigation found this one was too steep, and allowed to get too wet. High iron content made it brittle, too.In the end, there was no warning. After heavy rainfall in late 2018, it simply collapsed, releasing 10 million cubic meters of mud – roughly 4,000 Olympic swimming pools – in under five minutes.The timing for Vale was painful. It found itself accused of negligence and worse, just as the miner was emerging from another accident, the 2015 collapse of a dam owned by Samarco Mineracao SA, its joint venture with BHP Group. Schvartsman, a former pulp and paper executive, had stepped into the top job in 2017 vowing “never again.”The market’s immediate reaction was strong. Vale lost nearly a quarter of its value, almost $20 billion. Investors’ calculations of the ultimate cost were then obscured, though, as the hit to supply at the world’s largest iron-ore exporter eventually drove prices of the steelmaking ingredient well above $100 per metric ton.The cost is still unclear. That shouldn’t be startling. BP was still raising estimates for outstanding claims for Deepwater Horizon years after the event. In the end, the British oil major sold more than $70 billion of assets to remain in business; its shares haven’t recovered.The scale and jurisdiction are different here. Still, it’s surprising that Vale’s shares have bounced back.That doesn’t mean that no costs have been priced in. Compare Vale with iron ore-focused rival Rio Tinto Group. Rio’s London shares have risen almost 18% in the past 12 months thanks to surging iron-ore prices. Add in the impact of reinvested dividends, and the total return is more than 30%. The share increase alone implies a gap of some $16 billion with Vale.Some of that sum reflects the impact of lost revenue, given the 93-million-ton hit to production during a year when the price of high-quality Brazilian iron ore fines delivered to northern China averaged more than $100 a ton.The remainder, though, isn’t too far from what Vale itself has already set aside, handed out or had frozen for potential liabilities from Brumadinho: It paid $1.6 billion for reparations and compensation in 2019, and has provisioned $5.4 billion. Some 7.5 billion Brazilian real ($1.8 billion) of assets are frozen by the courts.  The trouble is, that covers mostly first-order costs, like payouts for workers and families, the wider clean-up and some fixes to similar facilities elsewhere. Vale plans to spend $1.8 billion over five years shifting to dry stacking, a safer method to dispose of mine waste. By 2023, it says 70% of its production will use this.The wider impact of Brumadinho and the 2015 disaster on Vale and the industry will be more profound. Risks to tailings dams and other mining installations are already increasing, and there may be more monitoring in some corners. Extreme weather including heavy rainfall is far more frequent, and declining ore grades, or the percentage of minerals in rock that’s dug up, mean more waste to deal with. This coincides with increased concern among shareholders for the environmental impact of investments.Higher bills for more inspections might be manageable for large miners, but what about significantly slower permits, higher costs of closure, or projects that get blocked entirely by disgruntled communities? During a high tide for populism in Brazil and elsewhere, that’s harder than ever to estimate. It’s unlikely Brumadinho will be forgotten by governments and communities as disasters like Mount Polley in 2014 largely were.According to a report by the Church of England Pensions Board, 40 of the top 50 mining companies had made disclosures on their websites about tailings dams as of late December, as requested by campaigners and shareholders. That’s a solid three-quarters of the mining industry by market capitalization, but leaves plenty of laggards. Schvartsman, in the aftermath of Brumadinho, said Vale was a “Brazilian jewel” that could not be condemned because of an accident. His gross underestimation of the seriousness of the situation cost him his job,  and moreInvestors and rivals would be wise not to make the same mistake. To contact the author of this story: Clara Ferreira Marques at cferreirama@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis 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.