Copper was a strong performer for Rio Tinto Ltd (ASX:RIO) (LSE:RIO, ASX:RIO, OTC:RTNTF) during the December quarter with mined copper production increasing 21% quarter-on-quarter to 202,000 tonnes, comfortably ahead of the consensus estimate of 182,000 tonnes.
This saw copper production of 697,000 tonnes across the group for the 12 months, a 13% increase year-on-year.
The quarterly rise reflects a ramp-up of production from the Oyu Tolgoi underground operations in Mongolia and increased production from the Escondida Mine JV in Chile due to higher grades fed to the concentrator - 0.99% versus 0.83%.
Rio’s copper performance, however, was partly offset by geotechnical challenges at Kennecott as instabilities in the pit wall impacted the mining sequence from the June quarter of 2024.
The average copper price during the quarter was US$4.22 per pound for 2024, up from US$3.90 per pound in 2023.
Winu a future producer
On December 4, Rio signed a term sheet with Sumitomo Metal Mining (SMM) for a joint venture to deliver the Winu Copper-Gold Project in Western Australia.
Rio will continue to develop and operate Winu as managing partner and SMM will pay $195 million upfront, and $204 million in deferred consideration, contingent on milestones and adjustments to be agreed.
The JV will work to finalise definitive agreements in the first half of 2025, along with formalising a broader strategic partnership.
Good iron ore quarter
In the three months ending December 31, 2024, Rio delivered iron ore production of 86.5 million tonnes and iron ore shipments of 85.7 million tonnes, representing increases of 3% and 1%, respectively, over the third quarter.
Shipments were lower than the consensus estimate of 87.5 million tonnes which meant for the full year, iron ore production and shipments were both down 1% year-on-year, at 328 million tonnes and 328.6 million tonnes respectively.
Productivity improvements of 10 million tonnes did not fully offset depletion, predominantly at Yandicoogina and Paraburdoo, as Rio transitions to Western Range operations.
The company’s Safe Production System target of 5 million tonnes for 2024 was achieved and Gudai-Darri reached 50 million tonnes per annum rates during 2024.
Rio’s average realised iron ore price was US$97.4 per tonne for the year, down from US$108.4 in FY 2023.
Bauxite production up
Bauxite production was 58.7 million tonnes in 2024, 7% higher than 2023, exceeding guidance. The improvement was driven by the implementation of the Safe Production System, delivering record annual production at Amrun and Gove, with the former operating above nameplate capacity.
Aluminium production of 3.3 million tonnes was 1% higher than 2023, following the ramp-up of Kitimat and completion of cell recovery efforts at Boyne in the prior year, together with increased ownership of Boyne and New Zealand Aluminium Smelter (NZAS).
These were partially offset by the continued closure program at Arvida and a request to reduce energy usage at NZAS, resulting in lower output. Production at NZAS is expected to be fully ramped up in the second quarter of 2025.
Move into lithium
On October 9, Rio announced a definitive agreement to acquire Arcadium Lithium PLC (NYSE:ALTM, ASX:LTM) in an all-cash transaction for US$5.85 per share. This will bring Arcadium’s world-class, complementary lithium business into the portfolio, establishing a global leader in energy transition commodities.
Most of the required foreign investment approvals have been received, including clearance by the Committee on Foreign Investment in the United States (CFIUS) in January 2025 and all of the required merger control clearances. Closing of the transaction remains subject to foreign investment approvals in Australia and Canada, approval of the Royal Court of Jersey and other closing conditions, and is expected to occur before mid-2025.
Another lithium development came on December 12 when Rio approved expenditure of $2.5 billion to expand the Rincon project in Argentina, its first commercial-scale lithium operation, to an annual capacity of 60,000 tonnes of battery-grade lithium carbonate.
Mine life is expected to be 40 years, with construction of the expanded plant scheduled to begin in mid-2025, subject to permitting. First production is expected in 2028 with a three-year ramp-up to full capacity.
The project uses direct lithium extraction (DLE) technology, a process that supports water conservation, reduces waste and produces lithium carbonate more consistently than other methods.
“Good performance”
Overall, during 2024 the mining major delivered 1% production growth and a 3% increase in sales volumes, both on a copper equivalent basis.
Rio Tinto chief executive Jakob Stausholm said: “Our operating performance in 2024 was good, consistent with our ongoing commitment to strengthen the business as we execute our strategy to deliver profitable growth.
“The implementation of our Safe Production System has again contributed to greater consistency across key operations, including our iron ore assets in the Pilbara and our bauxite operations in Australia, where Amrun and Gove achieved record annual production.
“We are making strong progress in delivering organic growth from our major projects. The Oyu Tolgoi underground copper mine in Mongolia continues to successfully ramp up, while the Simandou high-grade iron ore project in Guinea and our Western Range mine in the Pilbara are on schedule for first production this year.
“Significant milestones were achieved at our Rincon project in Argentina during the quarter, with first lithium delivered and receipt of Board approval to expand the operation, demonstrating both our operational capabilities and ambition to grow in battery materials.
"We remain focused on executing our strategy to deliver attractive shareholder returns and build a stronger, more diversified, and growing business, driven by our confidence in the long-term demand for materials essential to the global energy transition.”
The future
During the company’s Investor Seminar in December, the Executive Committee outlined its ambition for a decade of around 3% compound annual growth in copper equivalent production, driven by Oyu Tolgoi’s copper, Simandou’s iron ore in Guinea and the new lithium portfolio.
Rio Tinto has also reaffirmed its recently announced guidance for FY 2025:
- Iron ore shipments of 323 million to 338 million tonnes;
- Copper production of 780,000 to 850,000 tonnes;
- Aluminium production of 3.25 million to 3.45 million tonnes; and
- Bauxite production of 57 million to 59 million tonnes.
Shares have traded higher today, in the range of $119.37-$121.18 after closing at $119.49 on Wednesday.