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Rio Tinto (RIO) Kennecott Operations to Run on Renewable Diesel

Rio Tinto RIO announced that its Kennecott copper operation will fully shift from fossil diesel to renewable diesel in the first quarter of 2024. This move aligns with Rio Tinto’s efforts to transition toward cleaner energy sources and achieve its net-zero carbon goals. This change will not only lower the operation’s carbon footprint but also set an example for the mining industry to adopt cleaner and more sustainable energy alternatives.

Kennecott, located near Salt Lake City, UT, has been mining and processing minerals from the rich ore body of the Bingham Canyon Mine since 1903. It is currently the second-largest copper producer in the United States.

The entire fleet of 90 haul trucks, heavy machinery as well as the concentrator, smelter, and refinery at the Kennecott copper operation will now run on renewable diesel. Renewable diesel is produced using renewable biogenic materials sourced in the United States. It will be distributed through the existing diesel supply chain, as part of an ongoing collaboration between Kennecott and HF Sinclair.

Since 2019, Rio Tinto has so far lowered the operation’s carbon emissions by 65%. The current move will help cut down Kennecott’s Scope 1 carbon emissions by the equivalent of 495,000 tons of carbon dioxide per year. This is the same as eliminating the annual emissions of more than 107,000 passenger cars.

In May 2023, Rio Tinto  announced that its Boron, CA operation had started operating with a fleet running on renewable diesel. It was the first open pit mine in the world to manage this feat. This transition of the heavy machinery at the site from fossil diesel to renewable diesel is expected to result in an annual reduction in carbon dioxide emissions by up to 45,000 tons.

The transition at these two operations would replace 11% of Rio Tinto's global fossil diesel consumption with renewable diesel. The company is targeting reductions in Scope 1 and 2 carbon emissions of 50% by 2030 and net zero by 2050.

Rio Tinto is investing in underground development infrastructure and strengthening its processing facilities at the Kennecott operations. This will help the company boost its copper output and capitalize on the growing demand for metal stemming from the trend of energy transition.

Price Performance

In the past year, shares of Rio Tinto have declined 3.8% against the industry’s 5% growth.

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Zacks Rank & Stocks to Consider

Rio Tinto currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the basic materials space are Axalta Coating Systems Ltd. AXTA, Universal Stainless & Alloy Products, Inc. USAP and The Andersons Inc. ANDE. While AXTA sports a Zacks Rank #1 (Strong Buy), USAP and ANDE carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Axalta Coating’s 2023 earnings is pegged at 44 cents per share. The consensus estimate for 2023 earnings has moved 23% north in the past 60 days. Shares of AXTA have gained 26% in a year.

Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 27 cents per share. Earnings estimates have been unchanged in the past 60 days. Shares of USAP have rallied 140% in the last year.

The consensus estimate for ANDE's current-year earnings has been revised 3.3% upward over the past 60 days. Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average. Shares of ANDE have surged around 32% in a year.

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