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Rio Tinto 2017 mined copper production update

Metal News - Published on Wed, 17 Jan 2018

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Rio Tinto announced that mined copper production in 2017 was three % lower than 2016, with lower grades partially offset by higher mill throughput. Fourth quarter production was 23 % lower than the corresponding period of
2016 as mining entered an anticipated area of lower grade. Higher grade material is expected to be accessed in 2018.

Refined copper production in 2017 was 20 % lower than 2016 due to the shutdown of the smelter following the fatality in October 2017. The smelter resumed production in November 2017 and is expected to draw down the increase in concentrate inventory during the first half of 2018.

Rio Tinto Kennecott continues to toll and purchase third party concentrate, with 161.4 thousand tonnes received for processing in 2017. Tolled copper concentrate, which is smelted and returned to customers, is excluded from reported production figures.

The pushback of the south wall progressed during the quarter. It will extend the life of mine and remains on track for completion in 2020.


Mined copper production at Escondida in 2017 was 11 % lower than 2016 due to the labour union strike that impacted production in the first half of 2017. Fourth quarter production was 26 % higher than the corresponding quarter of 2016 due to an increase in concentrator throughput, largely driven by commissioning of the Los Colorados concentrator.

Oyu Tolgoi

Mined copper production from the open pit in 2017 was 22 % lower than 2016, as phases 2 and 3, which were sources of higher grade ore, were fully depleted by the end of 2016. Despite this, the operation established new records for rates of total material moved and mill throughput in the year. Copper production in the fourth quarter was 23 % higher than the previous quarter due to improved mill availability and reduced ore hardness.

Oyu Tolgoi LLC has received, and is evaluating, a Tax Act for approximately USD 155 million from the Mongolian Tax Authority relating to an audit on taxes imposed and paid by Oyu Tolgoi LLC between 2013 and 2015.

Oyu Tolgoi Underground Project

New contractors continue to mobilise with the total project workforce at over 6,600 at the end of 2017, 89 % of whom are Mongolian nationals. Lateral development is on plan, completion of Shaft 2 sinking is imminent and completion of Shaft 5 sinking is expected by the end of first quarter of 2018. Six accommodation buildings in the Oyut II camp are now complete. An annual project review was completed in the fourth quarter, and construction of the first drawbell is expected in mid-2020.


Through a joint venture agreement with Freeport-McMoRan Inc. (“Freeport”), Rio Tinto is entitled to the cash flow associated with 40 % of material mined above an agreed threshold as a consequence of expansions and developments of the Grasberg facilities since 1998.

In January and February 2017, the Indonesian government issued new mining regulations to address exports of unrefined metals, including copper concentrates, and other matters related to the mining sector. These regulations impact PT Freeport Indonesia’s operating rights, including its right to continue to export concentrate without restriction, and, as a result, had a significant impact on Rio Tinto’s share of production in 2017. Rio Tinto's full participation beyond 2021 is likely to be delayed due to the application of force majeure provisions in the joint venture agreement between Rio Tinto and PT-FI.

In March 2017, the Indonesian government amended the regulations and issued a permit to PT-FI that allowed concentrate exports to resume in April 2017. PT-FI is applying for an extension of its export permit, which expires in February 2018.

Based on the latest available forecast from Freeport, approximately 5.7 thousand tonnes of copper and no gold production in 2017 has been attributed to Rio Tinto. Freeport is expected to announce its fourth quarter and full year 2017 results on 25 January 2018. No share of production was attributed to Rio Tinto for the first three quarters of 2017, based on expected Rio Tinto share at the time.

Provisional pricing

At 31 December 2017, the Group had an estimated 250 million pounds of copper sales that were provisionally priced at 304 cents per pound. The final price of these sales will be determined during the first half of 2018. This compares with 235 million pounds of open shipments at 31 December 2016,
provisionally priced at 250 cents per pound.

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Posted By : Rabi Wangkhem on Wed, 17 Jan 2018
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