Unlike BHP, Rio Tinto to Pick and Choose Projects
Rio Tinto (LSE:RIO) is taking a different route than arch rival BHP Billiton (ASX:BHP).
The mining conglomerate is keen on “cherry-picking” the brightest projects and companies the market has to offer. According to Rio Tinto CEO Sam Walsh, it doesn’t even matter what they’re digging up.
“I am about the best projects—in the best segments, certainly—but am not restricting” the company to certain commodities, said Walsh.
The move is quite different than the strategy of BHP Billiton. The company announced earlier this year it would spin off its production of materials such as aluminium and nickel to focus on its four pillars of business – iron ore, coal, copper, and oil and gas.
“Complexity is compounded when you have too many products,” said Andrew Mackenzie, chief executive of BHP Billiton.
With over a dozen projects in a variety of commodities around the world, Rio Tinto is all about the biggest and most profitable projects. Similar to BHP, Rio is interested in expanding its copper business, which includes expansion initiatives its La Granja project in Peru and Resolution project in the U.S.
“I am a believer that you need a portfolio approach to your business,” Walsh said. “That different projects bring different value to the equation for different reasons.”
“Copper is going to be very prospective going forward.”
Copper production from top ten companies to increase by 3.8%
Copper production from the world’s top companies is set to increase by up to 3.8% this year, following a fall of 0.2% in 2020, GlobalData analysis reveals. Last year’s marginal slump saw production drop to 11.76 million tonnes (Mt).
The initial impact of the COVID-19 pandemic on mining operations was immense, however, six of the ten largest copper producers succeeded in increasing output last year. In 2021, copper production from the top ten copper companies is expected to bounce back, rising by up to 3.8%, to reach 12.2Mt, according to GlobalData, a leading data and analytics company.
The highest increase in copper production was by Canada’s First Quantum, which, despite all the challenges, reported 10.4% growth in 2020. The company’s Sentinel mine in Zambia and Cobre Panama were key contributors to this growth. While the latter remained under care and maintenance between April and August 2020, it delivered record production levels during the subsequent months.
Codelco, the world’s largest producer of the red metal used in electric vehicles, also bucked the trend.
Vinneth Bajaj, Associate Project Manager at GlobalData, commented: “Despite Codelco reporting over 3,400 active cases during July 2020, the company achieved 1.2% growth in its production in 2020. The company implemented a four-phase plan, as part of the COVID-19 measures, to ensure the health and safety of its employees, while also avoiding any significant impact to its copper output.”
Although the overall impact was minimal, declines in production were observed from Glencore (8.2%), Antofagasta (4.7%), BHP (3.9%) and Freeport McMoRan (1.3%). Reduced operational workforces due to COVID-19 measures, lower ore grades and production halts due to maintenance were the key disruptors to output during 2020.
The move towards electric vehicles and clean energy from renewables sources such as solar panels and wind turbines has driven the copper price to all-time highs. Copper has been among the best performers over the last month where metals ranging from aluminum to iron ore have surged to their highest prices in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the global pandemic.