Rio Tinto Group
Rio Tinto Group
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Tensions between Turquoise Hill Resources and its majority shareholder Rio Tinto over financing the Canadian-based company’s 66%-owned Oyu Tolgoi gold-copper project underground development has cost the job of CEO Ulf Quellmann.
Disagreements about the proposed $US6.75B Mongolian mine expansion led to a court stand-off last month, when Turquoise Hill obtained an urgent interim order against Rio Tinto.
The fate of one of the world’s most significant untapped copper deposits is in doubt again after new US President Joe Biden’s administration overturned the favourable environmental approval issued in the dying days of his predecessor Donald Trump’s government.
The proposed Resolution underground copper-molybdenum development, 60 miles east of Phoenix in Arizona, is a JV between Rio Tinto (55%) and BHP (45%).
Rio Tinto says it will dispute demands totalling $A406.5M from the Australian Taxation Office. The amended assessments for $359.4M primary tax and $47.1M interest are additional to more than $8.4B income tax paid in 2015.
The company says the ATO has refused interest deductions on an isolated borrowing that was used to pay an intragroup dividend. The borrowing was repaid in 2018.
START THE WEEK: WHAT YOU NEED TO KNOW
Brazilian global mining leader Vale has reinforced the growing recognition in the mining sector of the critical importance of companies meeting higher environmental, social and governance standards with the appointment of its first executive officer with exclusive responsibility for sustainability with her key focus on ESG.
(COMMENTARY)
The challenges of meeting newly awakened community expectations for environmental, social and governance standards make financial and investment sense for companies in the global mining sector.
New chief executive Jakob Stausholm has credited Rio Tinto’s business resilience along with strong commodity prices for its success in lifting net earnings for the year to end-Dec (FY2020) by 22% to $US9.77B, up from $8.01B the previous year.
Net cash generated from operating activities, driven by higher iron ore prices and operating stability, rose to $15.88B (FY2019: $14.91B), delivering free cash-flow of $9.41B ($9.16B) and underlying EBITDA of $23.9B ($21.2B).
All Rio Tinto's share, unless otherwise stated
A combination of foreign currency movements and new development costs have global iron ore major Rio Tinto facing a likely 12% rise in unit cash costs at its West Australian Pilbara system in the coming year.
After shipping 331Mt at cash costs of $US15.4/wmt FOB in FY2020, Rio expects costs on its forecast FY2021 shipments of 325-340Mt to reach $16.7-17.7/t.
Forty years of uranium production by Rio Tinto subsidiary ERA at the Ranger mine ended in early January, meeting the deadline for openpit operations to finish while it continues rehabilitation of the environmentally sensitive site in Australia’s NT.
ERA uranium sales revenue was $A242.2M for the year to end-Dec (FY2020), from $209.6M the prior year. Revenue from continuing operations rose to $254.9M ($235.9M).
(COMMENTARY)
ESG matters. The 2021 Mining & Metals survey by global law firm White & Case says the sector’s performance to the highest standards of environmental, social and governance management will be the dominant factor in retaining investor support for the mining sector.