By Rhiannon Hoyle
SYDNEY--Rio Tinto PLC (RIO.LN) said construction of its underground copper mine at Oyu Tolgoi in Mongolia will take longer and cost more than earlier envisaged.
The miner said Tuesday it is assessing mine design options given stability risks associated with its approved design, which could delay production by 16-30 months to between May 2022 and June 2023.
Rio Tinto estimated the capital spend for the project could now be as high as US$6.5 billion-US$7.2 billion, an increase of up to US$1.9 billion from the US$5.3 billion projected earlier.
The company said it is reviewing the carrying value of the Oyu Tolgoi mine and would disclose the outcome on August 1.
Rio Tinto separately said it shipped less iron ore from its Australian hub last quarter because of operational setbacks.
The miner, one of the world's top exporters of the steel ingredient, reported iron-ore shipments from its Pilbara operations of 85.4 million metric tons for the three months through June. That was down 3% on the same period a year earlier.
Rio Tinto last month downgraded its full-year projection for Pilbara iron ore shipments to 320-330 million tons, from an earlier forecast of 333-343 million tons, citing setbacks in the Greater Brockman hub especially. That follows disruptions earlier in 2019 from a cyclone and a fire at a key port.
The weaker outlook means unit costs are likely to be higher-than-anticipated in 2019, the company said Tuesday.
Still, Rio Tinto is benefiting from bumper prices for the commodity, which have rallied more than 60% this year to a five-and-a-half-year high, aided by production cuts from Brazil's Vale SA. Vale, which was forced to curb output following a deadly dam disaster in January, and Rio Tinto have historically been the top two shippers of iron ore globally.
Earlier this year, Rio Tinto said it was closely monitoring mining disruptions in Brazil to determine whether it should accelerate any projects to increase its own production, and should have a clearer idea by the end of this year. Although, the Anglo-Australian miner said it is more leveraged to, and consequently focused on, market prices versus its production volumes.
Rio Tinto also reported a 13% on-year fall in quarterly mined copper production because of weaker grades at Escondida and Kennecott.
Write to Rhiannon Hoyle at email@example.com