Source: Resolution Copper

A US House committee voted to include the language in a broader budget reconciliation package that would prevent Rio Tinto Ltd from building its Resolution copper mine in Arizona. Elected officials in nearby Superior, Arizona, have said the mine is crucial to the region’s economy. The tribe of San Carlos Apaches and other Indians say the mine would destroy the sacred land where they hold religious ceremonies. Conflict has stalled a decision until now, but the committee’s vote finalizes the language that will determine the future of the mine.

The House Natural Resources Committee on Thursday passed the Save Oak Flat Act, a $3.5 trillion compensation measure. Should the House reverse the move, the measure faces an uncertain fate in the US Senate. Approval of the measure would reverse a 2014 decision by former President Barack Obama that Congress began a complex process to hand over more than 40 billion pounds of copper owned by Rio Tinto in exchange for acreage Rio owns nearby. Former President Donald Trump gave final approval to the process before leaving office in January, but his successor Joe Biden could reverse it and leave the project in limbo.

A final reconciliation budget should also include funds for solar, wind, and other renewable energy projects that require tremendous amounts of copper. Electric vehicles consume much of the metal, as do internal combustion engines. The Resolution mine would cover about 25% of the demand for U.S. copper.

Mayor Mila Besich, a Democrat, said the project appeared stuck in “bureaucratic purgatory”. She hopes the House will not allow the language to remain in the final bill. The move “seems contradictory to what the Biden administration is trying to do to address climate change”, Besich said.

Rio said it would continue consultations with local communities and tribes. Rio Tinto chief executive Jakob Stausholm plans to visit Arizona later this year.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.
East Mountain, Canada – Komatsu excavator.

Komatsu is forming an alliance with some of its mining customers Rio Tinto, BHP, Coldelco, and Boliden called the Komatsu Greenhouse Gas (GHG) Alliance. The hope is that this will give Komatsu the chance to essentially supervise and guide these companies through a transition to zero-emission mining equipment and infrastructure. They plan to collaborate with these customers on their products, project development, and assaying. Komatsu’s President of Mining and Business Division Masayuki Moriyama said:

“We are honoured that our customers, several of the largest mining companies in the world, have agreed to participate in the Komatsu GHG Alliance and work in partnership with us to develop sustainable solutions for mining “We look forward to close collaboration with these industry leaders to accelerate development and deployment of the next level of equipment designed to reduce greenhouse gases from mining operations and ultimately achieve the goal of zero-emission mining.”

Komatsu has been investing in zero-emission technology for quite some time now through the development of electric diesel dump trucks, electric power, shovels, and regenerative energy storage equipment.

The goals of this partnership are two-fold. Firstly, they hope to work with these 4 companies to develop a haulage truck that can run on different power sources including diesel, electric, and hydrogen powered fuel cell tech. They hope to demo this product at the MINIExpo in Las Vegas this September. In the long-run, Komatsu hopes to reduce its products carbon footprint by 50% and perhaps even achieve carbon neutrality by 2050.

This alliance will hopefully help achieve these goals, and Komatsu also has to expand the alliance still further.

Rio Tinto and BHP plans to test trucks and purchase them first

Rio Tinto plans to purchase some of the first haulage trucks once Komatsu clears them for sale. Rio Tinto Chief Commercial Officer Alf Barrios said:

“Rio Tinto and Komatsu have a shared history of partnership on innovation going back to when we built the world’s largest Komatsu autonomous haulage fleet in 2008.”

“Our support of a trial, and the option to buy some of the first trucks from Komatsu, underscores our shared commitment to actively collaborate on product planning, development, testing and deployment of the next generation of zero-emission mining equipment and infrastructure as we look to decarbonise our business.”

On the other hand, BHP also will have access to the first edition of the trucks and will play a key role in their development. BHP plans to provide Komatsu with the key engineering and technical background needed for the haulage truck model’s development. It also plans to form a partnership with Komatsu via the BHP FutureFit Academy so that future users will be able to operate and maintain the equipment. 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.
Pilbara operations, social distancing during COVID-19. Source: Rio Tinto

Rio Tinto (NYSE:RIO) announced record earnings and dividends today as commodity prices continue to surge as the global economy starts to reopen. The company paid out over $9.1 billion in dividends to shareholders. The company’s stock also showed massive signs of growth, rising by 3% in the same day and moved up to a $138 billion market capitalization.

The rise in profits for the Anglo-Australian iron-ore mining company has been spurred on by rising demand for raw materials over the past year. According to recent reports, the average iron ore price rose to nearly $168.40 per dry metric ton, a near doubling from the raw price in 2020. This massive growth in price helped the miner’s yearly earnings increase from $4.75 billion in 2020 to nearly $12.17 billion in 2021, which was much higher than any analyst predicted.

Success Amid Disruption

Rio Tinto specializes in iron ore production, the key raw material necessary for the production of steel. The demand has been particularly from high China, who is one of the largest iron ore consumers on the planet. This is only projected to increase as China pushes for massive infrastructure development projects and as Brazil continues to struggle with supply problems, driving the price of steel through the roof.

The results on Wednesday also came during a transitional period for the company, after its former chief executive Jean Sebastian Jacques controversially stepped down last year. Since the new Chief Executive Officer Jakob Stausholm took over, the surge in prices have boded well for Rio Tinto’s future even as it struggled with some internal production issues.

Many of these production issues are similar to the ones many other manufacturers have dealt with during the COVID-19 pandemic. Due to restrictions on non-essential labour in numerous countries, the company has often found it difficult to get their workforce on site, which led to massive issues in its copper development project in Mongolia and its iron ore mining production in Western Australia. 

Rio Tinto’s CEO recently stated: “In the first half we experienced too much operational instability. We have to sharpen the consistency of our performance. While today’s results clearly demonstrate the underlying quality of our asset base, our operational performance clearly is not where it has been in the past or where we want it to be.”

Green Vision

The company aims to further use their profits not only to fill the pockets of shareholders, but to invest in production capabilities in newer green energy projects. Just this Tuesday, it announced a massive $2.4 billion spending initiative for a lithium mine in Serbia. Lithium is one of the primary materials used for rechargeable batteries and aims to diversify their product lines. 

Jefferies analyst Christopher La Femina commented on the company’s plans, saying: “Rio appears to be shifting from austerity and capital returns to more of a focus on growth. While Rio had some operational issues in the period, the big picture here is that these are stellar financial results.”

With the promising dividends and growth in raw materials prices and their increased infrastructure investment, Rio Tinto’s massive profits could continue to grow for 2021.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 
Source: Markets Hub

This is set to be a big week for mining earnings, as some of the world’s biggest mining companies will begin to show the market exactly how much this commodity boom is helping. This week will see the top five western diversified mining companies report earnings, and investors should be watching for record profits that could drive dividend payouts to match. 

Analysts estimates show that the top five miners may have raked in a combined $85 billion in the first half of 2021, double the number from 2020. Of course, lockdowns and supply chain meltdowns had serious effects on earnings last year. As processes slowed to a halt and demand dropped off a cliff, mining companies mainly were sitting on their hands like the rest of the economy. 

However, the latter part of 2020 saw engines start up and restrictions lifted in many mining-friendly jurisdictions, and 2021 has accelerated the commodity price gains from last year. 

The first to report on Wednesday will be Rio Tinto Group and is expected to announce $22 billion in profits for the first half of the year, equalling the same amount as its total profits in 2020. 

Other companies such as Glencore, Anglo American, and Vale SA were also expected to post massive profits for the first six months of 2021, and possibly their highest-ever numbers for the six months to June period, according to estimates from analysts compiled by Bloomberg.

The sector has seen a revival of its activities faster than most other sectors of the economy as the industry has been one of the primary beneficiaries of the recovery stimulus injected into the global economy. With trillions of dollars in recovery packages going out, demand for commodities has bounced off 2020 lows to skyrockets higher every single month. Demand for commodities like iron ore, aluminum, steel, and copper are driving prices higher every week while inflation pressures continue to spread through the economy. 

This bull run for commodities has been a huge gift for mining companies who have the tailwind of demand and higher prices for their production to account for big profits. 

Ben Davis, an analyst at Liberum Capital, said, “This should be a pretty much stellar set of results all round. We’re expecting record dividends from BHP and Rio, while Anglo and Glencore also have the potential to surprise.”

Stocks have been on a tear lately, up double digits in some cases in a single week, so there may be room to move higher on earnings news. Freeport-McMoRan already hinted at its blockbuster results when it announced it had wiped out $5 billion in debt over the last 12 months, blasting past a target month ahead of the planned schedule. 

A record dividend was also paid out by Anglo American Platinum Ltd. (79% owned by Anglo American) on Monday of $3.1 billion, equal to 100% of first-half headline earnings. In a significant understatement, CEO Natascha Voljoes said the company was in a “strong financial position” and that the company was able to deliver “industry-leading returns.”

Everyone is set to benefit from higher profits from miners this year, beyond stakeholders and investors in the companies themselves. Government should also see higher tax receipts from miners, who contribute significantly to the global economy and often up to a third of any given domestic economy in many regions like South and Central America, and Africa. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 
assasination assassinated murdered violence
Richards Bay Sands. Source: Rio Tinto

Rio Tinto’s Richards Bay mineral sands mine has seen multiple violent incidents over the years. The South African Police Service has been involved in numerous incidents in which workers, families, and subcontractors have dealt with difficult circumstances. 

After a senior manager at RBM was assassinated in late May, the company was forced to halt operations at the site. In late June, the company made the decision to keep the Richards Bay Minerals mining and smelting operations in South Africa’s KwaZulu-Natal province shuttered so that safety and security could be improved for workers. 

A Cold-Blooded Assassination

The late May tipping point was the assassination of Nico Swart, RBM’s general manager of operational services. While driving to work on a Monday morning, more than 20 high-caliber bullets were fired into his vehicle. The incident is being investigated by the South African Police Service, who hope to find some answers for Swart’s family, friends, and coworkers. Multiple setbacks have hindered progress at the project, as in April, RBM officials said that they were talking with government authorities to “permanently address violent protests around its operations before resuming work on the Zulti South project.” However, things have not improved since, and the company is taking final steps. 

On Monday, Rio Tinto announced that its operations at the Richards Bay Minerals (RBM) project in South Africa would remain shut despite further talks with the government. The murder of one of their top managers and the unsolved case has proven too difficult to overlook for all parties, it seems. 

Regular Violence From Protestors

The project employs about 5,000 people and will be a hit to Rio Tinto’s bottom line as well as the good the project does for the local economy. The Minerals Council of South Africa condemned the violence and the “failures” of law enforcement up to this point. The government had tried to prevent the suspension of activity at the minerals sands project. It is an integral part of the local economy, and Rio Tinto represents a strong economic partner for the country. 

However, the council said in a statement that, “Continued acts of lawlessness including blockages of roads, burning of equipment and intimidation of staff at mining operations are not only unacceptable and damaging to the country’s reputation as an investment destination, but also impact the lives and livelihoods of mining employees, their families, and surrounding communities.” The untenable situation is expected to calm down now that the project is halted. 

Optimistic Tone, But a Long Uphill Battle

Rio Tinto also commented on Monday, stating that everyone is looking forward to the resumption of operations as soon as possible. The optimistic outlook from the company may suggest it intends to broker a deal with local communities or create a new project. “But the safety of our people and the security of our operations must be assured before we can return to work,” a spokesperson said.

The company owns a 75% interest in the mine, which has been plagued by violent incidents related to violent protests. In 2018, Rio Tinto had to freeze operations twice because of violent protests by contractors and then stopped work at the mine again in 2019 when one of its employees was shot. This latest event makes it unclear whether Richards Bay will ever be able to resume normal operations, which includes mining, refining, and smelting of heavy minerals or ore deposits. A joint venture Rio Tinto and Blue Horizon (owns 24%), the remaining shares are held in an employee trust. 

RBM produces ilmenite, rutile, and zircon, some of which are highly valuable and used in things such as sunscreen, paint, and even smartphones.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

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