U.S. copper frenzy grows as Rio Tinto plans $1.5 bln Utah mine expansion

Nevada Copper

03/12/2019 17:14

By Ernest Scheyder
    Dec 3 (Reuters) - Rio Tinto Plc  RIO.L   RIO.AX  said on
Tuesday it would spend $1.5 billion to expand its Kennecott
copper mine in Utah, part of a growing trend by miners to invest
in strategic mineral projects across the United States. 
    The move more than doubles the mining industry's recent
investment in U.S. copper projects, as Tesla Inc  TSLA.O  and
other automakers demand more of the red metal for electric
vehicle motors and other components.
    "We like copper. We like the U.S.," Rio Chief Executive
Jean-Sebastien Jacques said in an interview. "If we had not
taken this decision, our position in the U.S. market would be
shrinking."
    Rio said the investment will extend the life of the
more-than 100-year-old open-pit mine near Salt Lake City from
2026 through 2032, with the potential to keep it operational
thereafter. The expansion project, which Rio said will generate
"attractive returns" without elaborating, is set to get underway
next year.
    Once seen as a laggard in the global mining industry, U.S.
copper deposits have drawn more than $1.1 billion in recent
investments from small and large miners alike before Rio's
Tuesday announcement.
    U.S. President Donald Trump has moved to cut mining
regulations since taking office in a bid to encourage domestic
mining and also offset China's control of key parts of the
military weapons supply chain, efforts that have dovetailed with
those in the U.S. Congress. urn:newsml:reuters.com:*:nL1N1ZF182 urn:newsml:reuters.com:*:nL2N22Q0ID  
    The Kennecott mine on privately-owned land produces nearly
20% of the U.S. copper production, as well as gold and silver.
Rio operates one of three U.S. copper smelters at the site.
    The Anglo-Australian company had telegraphed last year https://www.reuters.com/article/us-rio-tinto-copper/rio-tinto-ready-to-splash-out-on-copper-idUSKBN1JP0LB
 that it was on the hunt for fresh copper, though analysts had
assumed a large acquisition rather than expansion of an existing
asset, was likely.
    Rio has faced recent challenges in other parts of its copper
portfolio. Its Mongolian copper mine project hit a major setback
last month when lawmakers there approved plans to revise the
terms of an agreement underpinning the multibillion-dollar
development. urn:newsml:reuters.com:*:nL8N2815MJ 
    In Arizona, Rio's Resolution underground copper project with
BHP Group  BHPB.L  has spent years waiting for U.S. approval,
though the permit logjam appears to be clearing. urn:newsml:reuters.com:*:nL8N2555JL
    Rio also said on Tuesday it was working with U.S. government
scientists to extract rhenium and tellurium - used in jet
engines and military explosives - from Kennecott's refiners and
smelters.
    Rivals Glencore Plc  GLEN.L  and Freeport-McMoRan Inc
 FCX.N  also have U.S. mining projects under
development. urn:newsml:reuters.com:*:nL2N25918E urn:newsml:reuters.com:*:nL1N1ZF182         

 (Reporting by Ernest Scheyder
Editing by Bill Berkrot)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))