Rio Tinto
Summary
- Rio Tinto Plc is in the business of exploration, mining, and processing of mineral resources like Iron Ore, Aluminium, Copper and Diamonds, Energy and Minerals.
- Rio Tinto is the world's number one copper producer
- Rio Tinto works across six continents in around 35 countries. Most of assets are in Australia and North America, with operations also in Europe, Asia, Africa, and Central and South America.
Rio Tinto Plc (NYSE: RIO, LSE: RIO) is in the business of exploration, mining, and processing of mineral resources like Iron Ore, Aluminium, Copper and Diamonds, Energy and Minerals. The company has work in 35 countries includes mines, smelters and refineries, as well as in sales offices, data centres, research and development labs and with artificial intelligence.
Recent Developments
Rio Tinto completes sale of Cortez Gold Royalty for $525 million in cash1
02 August 2022; Rio Tinto has completed the sale of a royalty it holds on an area including the Cortez mine operational area and the Fourmile development project in Nevada to RG Royalties LLC, a direct wholly-owned subsidiary of Royal Gold Inc., for $525 million in cash.
The Cortez Royalty is a 1.2% gross production royalty on the Cortez gold mine that is operated by Nevada Gold Mines, a joint venture between Barrick Gold Corporation (“Barrick”) and Newmont Corporation; and the Fourmile project which is 100% owned and operated by Barrick. Rio Tinto obtained the royalty as partial consideration for the sale of its 40% interest in the Cortez Complex to Barrick in 2008. Royalty payments commence once the Cortez Complex has produced a total of 15 million ounces of gold since 2008. This is expected to occur imminently.
Financial Highlights
Half Year Results 2022
- Rio Tinto delivers underlying EBITDA of $15.6 billion and an interim dividend of 267 US cents per share2
- $10.5 billion net cash generated from operating activities, which was 23% lower than 2021 first half, flowed through to 30% lower free cash flow of $7.1 billion, which included a 6% decrease in capital expenditure to $3.1 billion, as its current programme of Pilbara replacement projects near completion.
- $15.6 billion underlying EBITDA was 26% below 2021 first half, with an underlying EBITDA margin of 50%.
- $8.9 billion of net earnings, 28% lower than 2021 first half, reflected the movement in commodity prices, the impact of higher energy prices on its operations and higher rates of inflation on its operating costs and closure liabilities. Effective tax rate on net earnings of 24.5% compared with 28.5% in 2021 first half.
- $0.3 billion of net cash at 30 June 2022, which compared with net cash of $1.6 billion at the start of the year, reflected the free cash flow of $7.1 billion, offset by $7.6 billion of cash returns to shareholders and the $0.8 billion Rincon acquisition.
Full Year 2021 Results
$25.3 billion net cash generated from operating activities was 60% higher than 2020 driven by higher prices. This flowed through to 88% higher free cash flow of $17.7 billion, which included a 19% rise in capital expenditure to $7.4 billion.3
$21.1 billion of net earnings, 116% higher than 2020, reflected the higher prices, the impact of closure provision increases at Energy Resources of Australia (ERA) and other non-operating sites, $0.5 billion of exchange and derivative gains and $0.2 billion of impairments. Effective tax rate on net earnings of 27.7% compared with 33.1% in 2020.
$37.7 billion underlying EBITDA was 58% above 2020, with an underlying EBITDA margin of 57%.
$21.4 billion underlying earnings (underlying EPS of 1,321.1 US cents) were 72% above 2020 with a 28.0% effective tax rate on underlying earnings, compared with 29.5% in 2020.
$1.6 billion of net cash at year end, compared with net debt of $0.7 billion at the start of the year, reflected the free cash flow of $17.7 billion, partly offset by $15.4 billion of cash returns to shareholders.
$16.8 billion full-year dividend, equivalent to 1,040 US cents per share and 79% of underlying earnings, includes $6.7 billion record final ordinary dividend (417 US cents per share) and $1.0 billion final special dividend (62 US cents per share) declared today.
Net debt reduced by $2.2 billion in 2021, resulting in a net cash position of $1.6 billion at 31 December 2021. This reflected its strong free cash flow, partly offset by dividend payments of $15.4 billion.
Capital projects
Iron Ore
$0.9bn (Rio Tinto share) Investment in the Robe River Joint Venture (West Angelas C and D and Mesa B, C and H at Robe Valley) in the Pilbara to sustain production capacity.
$2.6bn Investment in Gudai-Darri, a new production hub in the Pilbara region of Western Australia. The investment incorporates a processing plant and infrastructure including a 166-kilometre rail line connecting the mine to its existing network. Once complete, the mine will have an initial annual capacity of 43 million tonnes.
Aluminium
$0.8bn Investment in a second tunnel at the 1000MW Kemano hydropower facility at Kitimat, British Columbia, Canada, which will ensure the long-term reliability of the power supply to the Kitimat smelter.
Copper
$1.5bn for Phase two of the south wall pushback to extend mine life at Kennecott by a further six years.
$6.925bn Development of the Oyu Tolgoi underground copper/gold mine in Mongolia (Rio Tinto 34%), which is expected to produce (from the open pit and underground) an average of ~500,000 tonnes of copper per year from 2028 to 2036 and an average of ~350,000 tonnes of copper per year for a further five years, compared with 163,000 tonnes in 2021 (open pit).
Minerals
$0.5bn for Development of the Zulti South project at Richards Bay Minerals (RBM) in South Africa (Rio Tinto 74%).
$2.4bn Development of the greenfield Jadar lithium-borates project in Serbia. The development will include an underground mine with associated infrastructure and equipment, including electric haul trucks, as well as a beneficiation chemical processing plant.
Operations
The company work across six continents in around 35 countries. Most of its assets are in Australia and North America, with operations also in Europe, Asia, Africa, and Central and South America.4
To produce aluminium, copper, diamonds, gold, industrial minerals and iron ore, the company own and operate open pit and underground mines, mills, refineries, smelters, power stations, research and service facilities. The company also use its own railways, ports and ships to deliver materials to its customers.
Australia
Pilbara
In the Pilbara region of Western Australia, the company own an integrated portfolio of iron ore assets: a world-class, integrated network of 17 mines
Weipa
The company's Weipa operations in Far North Queensland includes three bauxite mines, processing facilities, shiploaders, an export wharf, two ports, power stations, a rail network and ferry terminals.
Yarwun Alumina Refinery
Yarwun shipped its first alumina in late 2004 and today produces more than three million tonnes of alumina per year.
Dampier Salt
Dampier Salt Limited, located in Western Australia and comprising three solar salt operations – Dampier, Port Hedland and Lake MacLeod – is the world’s largest exporter of seaborne salt.
Gove
The company's Gove Operations have been supplying the global aluminium industry with world-class bauxite for more than 40 years.
Bell Bay Aluminium
Operating since 1955, Bell Bay holds a unique place in Tasmanian and Australian history as the first aluminium smelter in the Southern Hemisphere
Boyne Smelters Limited
Boyne Smelters Limited has been operating since 1982 and is Australia’s second largest aluminium smelter.
Argyle
Ceasing mining in 2020, Argyle was one of the world’s largest producers of diamonds and the largest supplier of natural coloured diamonds
Energy Resources of Australia Ltd
Energy Resources of Australia Ltd is one of Australia’s largest producers of uranium.
Canada
Saguenay – Lac-Saint-Jean
An important hub for its aluminium business, the Saguenay – Lac-Saint-Jean region is responsible for close to half of its global aluminium production.
BC Works
The company's BC Works operation comprises a newly modernised aluminium smelter and the Kemano Powerhouse, a hydropower facility supplied by the Nechako reservoir
Diavik
About 200 kilometres south of the Arctic Circle sit some of the world’s most sought-after diamonds.
Rio Tinto Fer et Titane
RTFT operates an open cast titanium dioxide mine at Lac Tio near Havre-Saint-Pierre and, at its metallurgical complex in Sorel-Tracy, extracts high-quality titanium dioxide feedstock, pig iron, steel and metal powders from the ore.
Iron Ore Company of Canada
Iron Ore Company of Canada operations are integrated across Labrador City, Newfoundland and Labrador and Sept-Iles, Quebec.
Iceland
ISAL
The company's ISAL aluminium smelter produces some of the highest quality, lowest carbon footprint aluminium in the world
Madagascar
QIT Madagascar Minerals
The company's operation near Fort Dauphin in the Anosy region of south-eastern Madagascar produces ilmenite, which is a major source of titanium dioxide
Mongolia
Oyu Tolgoi
Oyu Tolgoi is one of the largest known copper and gold deposits in the world. It is also one of the most modern, safe and sustainable operations in the world.
New Zealand
New Zealand’s Aluminium Smelter
NZAS converts alumina into aluminium using renewable hydroelectricity, resulting in one of the lowest carbon footprints for an aluminium smelter in the world.
South Africa
Richards Bay Minerals
The company's Richards Bay Minerals operation is a world leader in heavy mineral sands extraction and refining and is South Africa’s largest mineral sands producer.
US
Kennecott
The company's Kennecott mine is a world-class, integrated copper mining operation that has been mining and processing minerals from the rich ore body of the Bingham Canyon Mine since 1903, and is even today one of the top producing mines in the world.
Boron
The company mine borates, a naturally occurring mineral, from its mine in Boron, California, which the company then refine and transform into products essential to modern living.
Company History
The company has a great history from an ancient mine to the world's #1 copper producer5
| 1873 | Founding: Led by Scottish entrepreneur Hugh Matheson, a British-European investor group buys the Rio Tinto mines in Spain in 1873 |
| 1954 | After 80 years, two-thirds of the now low-yielding Rio Tinto mine in Spain is sold. The proceeds finance new exploration companies in Africa, Australia and Canada, and lead to the establishment of new, major uranium mines in Canada and the Mary Kathleen mine in Australia. |
| 1961 | Geologists set out across the Hamersley ranges in The companystern Australia to assess the iron ore prospects with little more than a field table and a hammer. In just 20 months almost 300 kilometres of railway is laid, 12 million cubic metres of earth and rock is moved and 300,000 tonnes of plant and equipment is installed. |
| 1962 | The UK and Australia-based companies related to the Rio Tinto Company and Zinc Corporation merge to form the RTZ Corporation and CRA Limited, respectively. Thirty-three years later RTZ and CRA will themselves merge to become a single company: the Rio Tinto Group. |
| 1968 | The company add another essential material to itsportfolio with the purchase of US Borax, a company that traces its roots to California’s Death Valley, where borate deposits The companyre discovered in 1872. Today, The company mine approximately three million tonnes of borate ore every year, producing nearly half of the world's supply of refined borate products. |
| 1979 | The Ashton Joint Venture, managed by a Rio Tinto predecessor company, discovers the Argyle Diamond in remote The companystern Australia. It doubled world production overnight and became the world’s largest producer of coloured diamonds, including virtually the entire world’s source of rare pink, red and violet diamonds. |
| 1985 | The company acquire a 30% interest in the Minera Escondida copper mine in Chile’s Atacama Desert, the world’s largest copper-producing mine. Escondida is managed by BHP Billiton. |
| 2001 | After years of exploration and drilling, Ivanhoe Mining Mongolia Inc, part of today’s Turquoise Hill Resources make the first major ore discoveries at Oyu Tolgoi, in Mongolia’s Gobi Desert. Many years of further exploration have revealed the impressive scale of the deposit. Today, Oyu Tolgoi is jointly owned by the government of Mongolia, which has 34% ownership, and Turquoise Hill Resources, which owns 66%. Rio Tinto owns 51% of TRQ, and manages the operation. |
| 2003 | First production of diamonds at Diavik Rio Tinto commences commercial production at the Diavik Diamond Mine, some 200 kilometres below the Arctic Circle in the NorthThe companyst Territories, Canada. |
| 2012 | Built the world’s largest wind-diesel hybrid poThe companyr facility The company invest C$31 million to build the world’s largest wind-diesel hybrid poThe companyr facility at the Diavik Diamond Mine, 200 kilometres from the Arctic Circle in Canada’s NorthThe companyst Territories. Itswindfarm continues to reduce diesel use through leading-edge cold-climate technology. |
| 2016 | The world’s first certified low-carbon aluminium The company introduce RenewAlᵗᵐ, the world’s first certified low-carbon aluminium. RenewAlᵗᵐ contains no more than fitstonnes of carbon dioxide per tonne of aluminium, enabling a cleaner start to the lifecycles of everything from cars to smart phones. |
| 2018 | First intelligent mine Construction begins on the Gudai-Darri iron ore mine in The companystern Australia, itsmost intelligent mine. In addition to technology already in use across Rio Tinto, such as autonomous trucks, trains and drills, the site has more than 70 design innovations in scope. Fully integrated mine operation and simulation systems, including digital twin technology, will improve safety, maintenance and productivity – and will be accessible in real-time in the field. Gudai-Darri will set a benchmark for itsindustry in terms of automation and the use of data. |
References
- ^ https://www.riotinto.com/news/releases/2022/Rio-Tinto-completes-sale-of-Cortez-Gold-Royalty-for-525-million-in-cash
- ^ https://www.riotinto.com/news/releases/2022/Rio-Tinto-delivers-underlying-EBITDA-of-15,-d-,6-billion-and-an-interim-dividend-of-267-US-cents-per-share
- ^ https://fintel.io/doc/sec-rio-tinto-plc-863064-20f-2022-february-25-19048-5537
- ^ https://www.riotinto.com/operations
- ^ https://www.riotinto.com/about/business/history
