Copper group

Rio Tinto's Bingham Canyon mine near Salt Lake City, Utah, in the US, produces copper, molybdenum and gold.

Rio Tinto's Copper group comprises Kennecott Utah Copper (KUC) in the US and interests in the copper mines of Escondida in Chile, Grasberg in Indonesia, Northparkes in Australia, Palabora in South Africa, and the Resolution Copper project in the US. It has management responsibility for Kennecott Minerals Company in the US. The group also produces gold and molybdenum as significant coproducts.

In 2006, the group acquired the La Granja project in Peru and took ownership interests in Ivanhoe Mines and Northern Dynasty Minerals, which have the Oyu Tolgoi deposit in Mongolia and the Pebble deposit in the US, respectively.

The Copper group's contribution to earnings was US$3,562 million, 76 per cent higher than in 2005. At 31 December 2006, it accounted for 16 per cent of Rio Tinto's operating assets and, in 2006, contributed approximately 28 per cent of its sales revenue, of which 74 per cent was from copper, 13 per cent from molybdenum and the remainder mostly from gold. It accounted for 49 per cent of Rio Tinto's underlying earnings in 2006. Driving the improved result were stronger copper prices, which were on average 84 per cent higher than in 2005.

KUC's contribution to earnings was US$1,804 million compared with US$1,037 million in 2005. Rio Tinto's share of earnings from Escondida increased by US$648 million to US$1,250 million. The earnings contribution from the Grasberg joint venture decreased by US$110million to US$122 million. Northparkes contributed US$229 million, benefiting from higher prices, better grades, increased throughput and improved recoveries. Palabora recorded a profit of US$52 million in 2006, due to the improved performance of its underground production.

The group's production of copper was up two per cent on 2005.