Rio Tinto’s Copper group is a world leader in copper production. Operations include Kennecott Utah Copper in the US and interests in the producing copper mines of Escondida in Chile, Grasberg in Indonesia, Northparkes in Australia and Palabora in South Africa. In 2009, the group produced approximately 800,000 tonnes of copper, which places it among the top five copper producers in the world. Gold and molybdenum are also valuable by-products of the group’s mines. In addition to its producing assets, the group has interests in three of the world’s largest undeveloped greenfield copper projects. The group also includes major nickel deposits in the US and Indonesia.
Andrew Harding, chief executive, Copper. See biography
For more information see production and reserves
| US$ million | |
|---|---|
| Revenue | 6,206 |
| Operating cash flow | 2,223 |
| Underlying earnings | 1,866 |
| Capital expenditure | 553 |
| Net operating assets | 5,028 |
Operating cash flow contribution
Underlying earnings contribution*
2007-2009 US$m
- * A reconciliation of the net earnings with underlying earnings for 2008 and 2009 as determined under EU IFRS is set out in the Group financial performance. All amounts presented by the product groups exclude net interest and other centrally reported items.
Strategy
- Deliver shareholder value by significantly increasing copper production in the medium term.
- Be an innovative, disciplined acquirer and developer of value creating assets.
- Optimise and develop the group’s existing assets.
- Continue to invest in innovative technologies such as block caving and sulphide leaching to maintain leadership in the mines of the future.
- Leverage the diverse portfolio of producing and developing mines to adapt to changing economic conditions.
Achievements
- At Kennecott Utah Copper (KUC), the concentrator set multiple plant production records, including total ore milled and copper in concentrate produced.
- Also at KUC, the resource development team identified a new copper-molybdenum-gold porphyry system.
- KUC and Escondida both successfully negotiated new mutually beneficial collective bargaining agreements with their work forces in 2009.
- A landmark investment agreement with the Government of Mongolia progressed the development of the Oyu Tolgoi project. Rio Tinto increased its stake in Ivanhoe Mines to 19.7 per cent.
- Kennecott Eagle Nickel successfully addressed certain key legal challenges to its mine permits in the US.
Key priorities
- Exceed the improved safety performance in 2009 with a focus on embedding process safety risk reviews.
- Development of the world class Oyu Tolgoi copper-gold deposit in Mongolia.
- At KUC, progress the molybdenum autoclave project and continue life of mine extension through local drilling programmes.
- Complete the Northparkes E48 development and ramp up to full production.
- The Copper Projects function will maintain and maximise options around key projects and pursue opportunities to accelerate the start of production.
Outlook
- Industry fundamentals support a strong outlook on price, with robust long term demand and supply side constraints.
- Continued price volatility with upside potential.
- Industry will be challenged by mines of increasing depth, decreasing grade profiles and increasing exposure to higher risk regions.
- Gradual transition to underground mines which require higher capital costs and investment in innovative technologies.