Amidst the fervor of copper production expansion, Rio Tinto is steering its focus towards the development of mines in Mongolia, Utah, and beyond, amplifying its global exploratory endeavors. The mining giant has forged a noteworthy partnership with Codelco, the titan of copper production based in Chile, marking a strategic move in the lucrative realm of copper mining.
Asserting an organic growth trajectory, Arnaud Soirat, Rio Tinto’s impending chief commercial officer, underlines a future rooted in advancing in-house production. “For us, the focus is organic growth, supply growth and where in projects can we partner rather than necessarily acquiring an existing production,” Soirat declared during a media interaction in Santiago.
Soirat accentuated that Rio Tinto is poised to inject more capital into Chile if the nation optimizes its permitting processes, offering a clear pathway not only for new ventures but also to enhance the efficacy of current operations.
Building for Efficiency
Move over, traditional acquisition routes! Despite the escalating costs and prolonged timelines involved in project development, Soirat champions the conviction that constructing new mines remains a more cost-effective approach compared to purchasing existing ones. Such a vision may leave industry speculators, eagerly anticipating a wave of mergers and acquisitions, somewhat dismayed.
As Soirat judiciously noted, industry consolidation only holds merit if it augments the supply of copper, a metal pivotal in the global transition towards sustainable energy. “Just bringing one and one together doesn’t add more copper,” he emphasized. “The key question is how can we bring more supply.”
The mounting expenses tied to establishing new copper mines have witnessed a staggering surge over the years. Back in 2000, launching a new copper mine required an average capital outlay ranging from $4,000 to $5,000 to yield a tonne of copper. Fast forward to 2012, this figure had ballooned to $10,000 per tonne, with recent analyses now hinting at a staggering $44,000 per tonne for production.
Robert Friedland, the visionary behind Ivanhoe Mines, insightfully estimated that copper prices need to soar close to $15,000 per tonne and sustain that high level for an extended period before the sector can truly gear up and unleash the construction of much-needed new copper mines.
Soirat, who embarked on his Rio Tinto journey in 2013 and ascended to the role of copper chief in 2021, captained the successful execution of the subterranean expansion at the Oyu Tolgoi copper mine in Mongolia.
Assuming the mantle of chief commercial officer in September, industry insiders are buzzing with speculations that Soirat is primed to ascend to the zenith as Rio Tinto’s upcoming chief executive officer.
(Adapted from Bloomberg)
