|Bid||96.04 x 0|
|Ask||87.31 x 0|
|Day's range||85.42 - 87.83|
|52-week range||72.77 - 107.99|
|Beta (5Y monthly)||0.86|
|PE ratio (TTM)||17.92|
|Earnings date||26 Feb 2020|
|Forward dividend & yield||5.69 (6.43%)|
|Ex-dividend date||05 Mar 2020|
|1y target est||60.42|
Rio Tinto chief executive J-S Jacques said "Covid-19 is a human tragedy and we all have to play our part as the pandemic spreads. Rio Tinto’s first priority remains the health and safety of all of our employees and communities. During these uncertain times, we continue to deliver products to our customers supported by our global sales and marketing teams.
Today, as a result of separate actions by the Premier of Quebec and the President of South Africa to contain the spread of COVID-19, Rio Tinto will slow down some of its operations.
(Bloomberg Opinion) -- Lockdowns imposed to control the coronavirus have battered China’s appetite for everything from coal to copper, pushing stockpiles of raw materials higher and global prices lower. The next crunch could come from supply. The risk of an outbreak is growing in ill-prepared producer countries, with mandatory quarantines and border shutdowns threatening to choke off production.Prices of bulk commodities are already seeing some support from such disruptions, as ports and mines close. Coking coal in particular has outperformed owing in part to Mongolia’s decision in late January to seal its border with China, which cut off a key source of supply. The impact may be only short term. With factory shutdowns spreading through the U.S. and Europe, the reduction in wider metals supply would need to be dramatic to offset crumbling global demand. Upheaval could provide some price support regardless.Appetite for virtually all commodities has slumped since January, when the extent of damage from the novel coronavirus became clear. Even where mills, smelters and factories stayed open, that largely translated into crammed warehouses. China’s industrial production, investment and retail sales for the first two months of the year plunged across the board, with construction particularly weak. China’s economy is now all but certain to contract in the first quarter from a year earlier.With European automakers and other manufacturers shuttering operations, the drop in commodity demand in the first three months is likely to be even worse than during the global financial crisis. Steel demand will fall more than a fifth, copper will slide 14% and aluminum almost a third, analysts at BMO Capital Markets estimate.It hasn’t helped futures prices that the latest wave of closures is coming as we head into the second quarter, usually a peak period for demand. China, by contrast, was worse hit during the quieter Lunar New Year. Copper, a bellwether of confidence in global manufacturing, has tumbled to four-year lows of around $4,800 per metric ton on the London Metal Exchange.Travel and quarantine restrictions have already damaged supply, making it harder for miners to fly employees in and out and impeding projects under construction. Peru’s quarantine has already prompted Anglo American Plc to stop all nonessential work at its $5 billion Quellaveco project and withdraw most of the site’s 10,000 staff and contractors. Canada’s Teck Resources Ltd. has suspended work at its Quebrada Blanca Phase 2 in Chile, while Rio Tinto Group says work has slowed on its underground mine at Oyu Tolgoi in Mongolia.Lockdowns may be even more severe. Copper mines are among the worst affected as Chile and Peru, the world’s top two producers, scramble to contain the virus, prompting Anglo American, Antofagasta and others to send staff home. Chilean state behemoth Codelco will work at reduced capacity for two weeks, while workers at BHP Group’s Escondida, the world’s largest copper mine, threatened action to compel the company to take more preventative steps. The miner said Saturday it would reduce the number of contractors onsite. Analysts at Bank of Nova Scotia estimate a two-week halt in operations in those two countries would amount to 325,000 tons of lost production — roughly 4% of their combined annual output. This serves to underline the geographical concentration of a handful of key materials. Lithium is produced mainly in Chile and Australia, while iron-ore exports are dominated by Australia and Brazil. The price surge after last year’s Vale SA dam disaster shows what a port closure could do to the iron-ore market, though such a move appears unlikely given the huge budget contribution that the material makes to Brazil and Australia.Many producer countries are developing economies and ill-equipped to handle an epidemic that has floored even the world’s richest nations. In Brazil, the response has been patchy at best, with some states taking measures that are increasingly at odds with the federal government. Poorly implemented lockdowns, as seen in the Philippines, could push thousands of casual workers out of cities in search of work in more remote areas — potentially extending the spread.If more drawbridges are raised, expect supplies from explosives and tires to heavy equipment to get blocked, hampering even mining operations that could otherwise keep going. In the meantime, low prices will hurt some higher-cost projects, though rock-bottom prices for oil, a significant input, will cushion the blow. This will affect smaller producers first, given the healthy balance sheets of big miners. Still, operations like Rio’s Pacific Aluminium, or pricey U.S. copper mines, look vulnerable.Demand was the first part of an unprecedented crunch for the global commodities industry. The second act is only beginning. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
at a key copper project months before they were disclosed to investors has referred his allegations to financial regulators. Richard Bowley said he had decided to report his concerns to authorities in the UK, US, Australia and Mongolia after his case for unfair dismissal was postponed because of the coronavirus outbreak. “The powers of the regulators to seek full discovery will bring the full extent of the wrongdoing that has occurred to the attention of the authorities, investors and the government of Mongolia,” Mr Bowley said in a statement.
To quote Vladimir Lenin, “There are decades where nothing happens; and there are weeks where decades happen.” European Miners are -40% since mid-Jan vs Chems -20%, Oil & Airlines -48%. Unlike previous crises, BHP, RIO & Anglo have low balance sheet risks; ~0.5x ND/EBITDA at spot commodities, or ~1.0x or below if prices fall -20%.
Rio Tinto’s Kennecott mine near Salt Lake City (SLC), Utah, was today impacted as a result of a 5.7-magnitude earthquake close to the town of Magna. All employees have been safely accounted for and evacuated from the potential risk areas. At this stage we have identified limited damage to the operation or risk to the surrounding community. A detailed inspection of the complex is currently being conducted, in conjunction with the local emergency services and Utah Department of Transportation.
Rio Tinto is working with the Government of Mongolia to ensure Oyu Tolgoi is operating in accordance with the restrictions the Mongolian authorities have put in place to contain the spread of COVID-19. The first priority of the Rio Tinto and Oyu Tolgoi teams is the health and safety of all of our employees, contractors and the wider community.
(Bloomberg Opinion) -- Oil majors and big miners have been falling over themselves to promise better behavior when it comes to greenhouse gases. A significant number now say they are targeting zero emissions. Unfortunately, not everyone agrees on exactly what that means. It leaves investors clear on good intentions, but far less so on how to price transition risk, compare strategies and judge success.The real trouble sits with the widest and most significant category of emissions — those that don’t come directly from operating a well or mine, but are produced indirectly when oil, gas, iron ore or coal is burned or processed by customers. For outfits like BP Plc and BHP Group, these so-called Scope 3 emissions can add up to as much as 90% of their total footprint. They’re also far harder to control, as they aren’t produced by the reporting companies themselves.Resources giants, even poorly performing oil majors, have the scale and financial clout to manage a transition to a carbon-light economy — should they choose to. The rapid destruction of value in segments of the coal sector has left few in doubt of how quickly they could be left behind if they ignore such downstream emissions. This week's collapse in oil prices is another memento mori for carbon-intensive businesses.That doesn’t mean everyone has embraced the idea of targeting Scope 3 emissions. Rio Tinto Group, for one, has said it can’t set targets for its clients, though it will engage in as yet unspecified projects with the likes of China Baowu Steel Group Corp. BHP will produce numbers later this year. Others, like BP, have promised to eliminate Scope 3 emissions where they’ve drilled the oil, but won’t commit to doing the same if they’re only doing the refining. Spain’s Repsol SA is among the few to be promising an absolute zero target for all three sets of emissions.In this flurry of green activity, what should investors be demanding?The first thing should be transparency. Many of the biggest emitters have yet to make full Scope 3 disclosures, including such pillars of developed-market stock indexes as Exxon Mobil Corp., Anglo American Plc, and Fortescue Metals Group Ltd. At this point, that decision is almost churlish: It isn’t hard for investors to do their own calculations. Those that don’t face up to the reality of decarbonization will increasingly be treated like any other business that’s careless about its medium- and long-term liabilities.A second point is comparability. Although the overwhelming majority of Scope 3 emissions for resources companies come from the processing and combustion of their products, the standard incorporates a range of other activities such as waste disposal, product distribution, and even business travel and staff commuting.To add to that complexity, companies can replace the standardized emissions factors used to produce the figures with bespoke ones if their customers operate particularly efficient plants. Without full transparency about where those savings come in, companies could reduce their footprint by leaning on overly generous assumptions, and claim credit that more rigorous competitors would miss out on.There is also the unsolved question of how to manage double-counting, when, for example, coking coal and iron ore are sold to a producer that will use both in making steel.Investors should demand the means to measure progress, and success. Laying out ambitions for emissions 30 years hence is all but meaningless unless you’re also describing a path to get there. If investors are to take these numbers seriously, they’ll want to see plans for the steps along the way.That won’t be easy. For oil majors, it will require nothing less than a reinvention of their entire businesses, moving into industries that have historically produced lower returns than fossil fuels, as former BP Chief Executive Officer Bob Dudley has pointed out.Mining giants that have depended on revenues from high-volume bulk commodities such as coal and iron ore will have to either push their customers to switch to new technologies such as hydrogen-reduced steel, or depend on less lucrative base metals, specialty commodities and agricultural inputs.Providing too much detail about the road ahead risks disclosing a company’s business strategy, too, or tilting the market. How much of the reductions will come, as with Glencore Plc, from allowing mines and wells to deplete naturally as their reserve base is used up? How much will depend on selling assets, such as BP’s near-20% stake in Rosneft? How much will rely on technology that exists, but is not yet used on a wide scale, like carbon capture and storage?The last point on fund manager wish lists should be consistency. Investors will benchmark talk of long-term ambitions against performance on actual, shorter-term activity.Gabriel Wilson-Otto, head of stewardship, Asia Pacific, at BNP Paribas Asset Management, suggests that will mean keeping an eye on capital spending: Projects that generate downstream emissions decades into the future should be attracting more scrutiny. Similarly, corporate lobbying will be monitored for evidence it is allowing organisations to flash up green ambitions but still campaign against action on climate.None of this should be a burden on good governance. The CDP, a nonprofit research group that pushes for greenhouse disclosure, found in 2014 that the return on investment for companies that do so was 67% higher than for those that didn’t.The winds of decarbonization are blowing through the commodities industry. Companies that don’t bend in the face of these changes will break. To contact the authors of this story: Clara Ferreira Marques at firstname.lastname@example.orgDavid Fickling at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
As previously disclosed, in light of the ongoing investigations by regulators into a payment made to a consultant in relation to the Simandou iron ore project in Guinea, a deed of deferral was mutually agreed between Rio Tinto and Sam Walsh, as a matter of good corporate governance. Sam was chief executive of the iron ore product group at the time the payment was made.
(Bloomberg) -- China is close to giving the go-ahead for some of its biggest state-owned companies to develop the giant Simandou iron ore mine in Guinea, potentially paving the way for the project to be built after years of legal wrangling.China’s State-owned Assets Supervision and Administration Commission, which oversees the biggest government-owned enterprises, is actively pushing forward with the project, the world’s biggest untapped iron ore deposit, according to people familiar with the plans who asked not to be identified as the talks are private.For years, it seemed the super-rich ore under a jungle-covered mountain range might never be dug up. Simandou was practically forgotten by the wider mining industry as owners including Rio Tinto Group, Israeli billionaire Beny Steinmetz and authorities in the West African nation fought over rights to develop it.That all changed in 2019 after Steinmetz ended a seven-year dispute with Guinea’s government that saw him relinquish claims on half of the mine. It’s now in the hands of a Guinean-led and Chinese-backed consortium that wants production to start within five years.The reemergence of Simandou has spooked executives at the top iron ore miners. Half of the project could deliver more than 100 million tons a year of the highest quality ore just as the outlook for the material sours and Chinese demand plateaus.Rio Tinto shares fell 2.2% in London, adjusted for the stock trading without the right to its latest dividend, amid broad declines among mining companies. BHP Group lost 2.5% on the same basis.Simandou is divided into four blocks, with blocks 1 and 2 controlled by a consortium backed by Chinese and Singaporean companies, while Rio Tinto Plc and Aluminum Corp. of China, known as Chinalco, own blocks 3 and 4.China is keen to help develop the deposit as it looks to secure more high-quality supplies, and also wants to expand its footprint in West Africa, according to the people. SASAC hasn’t formally approved the project, but is working out the details on how it will proceed and how the project will be funded, the people said.Chinalco will be involved in the development and SASAC is talking to other state-owned enterprises about building costly port and rail infrastructure, the people said. China Development Bank is likely to provide some of the funding and Asian Infrastructure Investment Bank is also being considered, the people said.Nobody immediately answered faxes or calls to SASAC, Chinalco or China Development Bank seeking comment.The cost of building a 650-kilometer (400-mile) railway stretching across Guinea has always been a roadblock for developers, with estimates reaching as high as $13 billion. With Chinese funding, the project becomes much more feasible.Chinese involvement in Simandou would create a dilemma for Rio. A rival developing the deposit would threaten the market for Rio’s most important commodity. Yet it could struggle to win shareholder support to pour billions of dollars into Guinea if it wanted to join the development.Rio Chief Executive Officer Jean-Sebastien Jacques in January in Beijing met with SASAC’s chairman to discuss bolstering cooperation between the mining giant and China’s state-owned groups, according to a statement from SASAC.The largest iron ore exporters, including Vale SA, expect a long-term shift by China’s mills to favor higher-quality raw materials, even as growth in steel output plateaus. Using premium grade ores can allow plants to boost efficiency and comply with tougher curbs on pollution. Simandou’s ores contain 65% to 66% iron, above the industry’s benchmark 62% iron content products, according to Rio filings.(Updates with shares in sixth paragraph.)\--With assistance from David Stringer, Sarah Chen and Alfred Cang.To contact Bloomberg News staff for this story: Thomas Biesheuvel in London at email@example.com;Steven Yang in Beijing at firstname.lastname@example.orgTo contact the editors responsible for this story: Lynn Thomasson at email@example.com, Nicholas Larkin, Liezel HillFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- China is poised to let some of its biggest state-owned entities help develop a giant West African iron-ore deposit that’s been tantalizingly promising and painfully problematic for two decades. Whatever happens next, this watershed moment for the steelmaking commodity is bad news for big producers, particularly Rio Tinto Group.The State-owned Assets Supervision and Administration Commission is actively pushing forward with the Simandou mine in Guinea, Bloomberg News reported Thursday, citing people familiar with the matter. The project may cost more than $20 billion.Simandou, tucked away in the south of Guinea, has near-mythical status in the industry, having been coveted by everyone from Ivan Glasenberg of Glencore Plc to Andrew Forrest of Fortescue Metals Group Ltd. and the late Roger Agnelli, former head of Vale SA. After 2007 and 2008, when Rio Tinto used Simandou’s promise to ward off BHP Group’s advances, it was heralded as the project that would open up a new, high-quality iron ore frontier in West Africa to rival Australia’s Pilbara. Instead, it’s been caught in years of expropriation rows, corruption investigations and political disputes. Not a ton has been dug up.A lot is still unclear about what Beijing’s blessing would mean in practice for the deposit, divided into four blocks. The first two were handed last year to SMB-Winning, a consortium backed by Chinese and Singaporean companies, while blocks 3 and 4 are held by Rio Tinto and Aluminum Corp. of China, known as Chinalco. In all likelihood, it will involve financing and practical support for the project’s logistics, the lion’s share of the total cost because of its complexity: 650 kilometers (404 miles) of railway, plus tunnels, roads and a port.Approval would be a significant bet on iron ore, and in some ways, a surprising one. Simandou is at least five or six years away from producing anything. It will miss the bulk of China’s latest infrastructure splurge and could well collide with slowing steel demand. Indeed, in 2018, Chinalco passed on the opportunity to buy Rio’s stake.Two years is a long time in commodities markets, though. China, squeezed by the trade war, has put the focus back on self-reliance for key commodities, and even half of Simandou’s deposit could deliver more than 100 million metric tons a year of high-quality ore, roughly 10% of Beijing’s annual imports. That would help buffer China against events such as a supply squeeze in 2019 caused by a disaster at a Vale dam in Brazil, which drove up iron-ore prices. For China, whose seaborne imports total more than 1 billion tons a year, that output crunch may have added roughly $20 billion or more of extra expenses, not far off the cost of Guinean infrastructure.All of this is a headache for the handful of miners that dominate iron ore production, none more so than Rio. It isn’t as if Pilbara will cease to be profitable. Brazil, with higher freight costs, looks more vulnerable on that front.But China’s newfound enthusiasm for Guinea, if confirmed, leaves Rio in an unwelcome quandary: It can’t ignore a project that could flood the market, especially with the high-quality ore that steel producers increasingly favor. Joining in might give it some control over timing, and the ability to blend Simandou ore with its existing output. Yet it will struggle to convince investors, who can see the miner’s technical and political struggles in Mongolia, and recall that it is still involved in an investigation by the U.S. Department of Justice over corruption allegations in Guinea.Then there's the risk that enthusiasm for West Africa could help secure funding for smaller projects, or prompt those already looking at the region, like Fortescue, to invest in destructive volumes.Simandou is still years away at best, and its complex logistics have defeated earlier pretenders. Yet China’s track record in digging up Guinean bauxite suggests it can be done. If nothing else, Beijing has sounded an iron ore warning. To contact the author of this story: Clara Ferreira Marques at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It looks like Rio Tinto Group (LON:RIO) is about to go ex-dividend in the next 4 days. This means that investors who...
Rio Tinto today announced plans to invest around $1 billion over the next five years to support the delivery of its new climate change targets and a company objective for net zero emissions from operations by 2050.
(Bloomberg Opinion) -- A combination of hefty dividends and contracting output is turning the world’s second-largest miner into the poster child for a $1.5 trillion industry’s growth quandary.Rio Tinto Group announced a record $3.7 billion final dividend Wednesday, adding to $11.9 billion of cash returns already paid in 2019. Yet it produced less iron ore, copper and aluminum, leaving market prices to lift underlying earnings by 18%. Rio’s Pilbara operations stumbled early in the year. Its Mongolian copper mine, a key source of future production and the basis of a greener portfolio, is now not only sorely overdue and over-budget, but also tangled in international tax arbitration. The $86 billion mining giant isn’t alone. High dividend yields and pedestrian output have begun to define resources heavyweights that used to be known for the exact opposite. Diversified groups relied on their varied sources of cash to expand, but large-scale opportunities are scarcer than ever, and portfolios look far less diverse too, once coal and other less appealing assets have been carved off. At Rio, iron ore now accounts for three-quarters of its underlying Ebitda.For investors, it hasn’t been all bad news. Since Chief Executive Officer Jean-Sebastien Jacques took the helm in 2016, Rio’s total return including reinvested dividends adds up to an impressive 112%, outpacing most rivals.Yet much of that is due to generous payouts. For a company that digs stuff up for a living, this may not be sustainable — especially for one that aims to build a portfolio better aligned with a carbon-light global economy. It may also be an indication of just how hard it is to change. Rio paid shareholders in 2019 more than double its capital expenditure budget for the same year.One priority has been copper. Under Jacques, head of that unit until he became CEO, Rio has said it wants to add more of the red metal as its existing mines age, and will look at other green ingredients, those for rechargeable batteries and the like. Yet a unit set up to consider just such deals hasn’t sealed a single one despite considering more than 200 opportunities, and the company has suffered blow after blow in Mongolia. Its Oyu Tolgoi mine in the South Gobi accounts for only a fraction of Rio’s value today, but could dictate the company’s fortunes. So far, it’s mostly an unhelpful headache. The mine, which Rio holds through Canada-listed Turquoise Hill Resources Ltd., is one of the largest copper deposits around, and could produce an annual 550,000 metric tons of copper, almost as much as Rio produced last year, plus 450,000 ounces of gold. In the parlance of big miners, it moves the needle.Unfortunately, it also encapsulates everything that makes such projects so challenging: tough geography, messy local politics and complex geology. The cost of the largest, underground, portion has swelled to as much as $7.2 billion, and could rise again when a final estimate is published later in 2020. First production may now be be 30 months later than predicted. Fears of a cash call have dragged down Turquoise Hill shares.In the latest development, Rio announced last week it would begin arbitration proceedings to solve a tax dispute. Few arbitration deals yield significant victories — ask Barrick Gold Corp. and Antofagasta Plc, which won a $5.8 billion ruling against Pakistan last year — and they tend to irk host governments, so it’s a worrying sign. The risk is that Oyu Tolgoi becomes Rio Tinto’s own version of Freeport-McMoRan Inc.’s Indonesian pride and joy, Grasberg – wonderful in theory, nearly impossible in practice.Rio won’t drop Mongolia, and not just because of Jacques’ own attachment to the project. A copper option, however long-dated, is valuable, even if the company doesn’t yet jump in to buy out Turquoise Hill minority shareholders.But what then? Rio has manageable debt and ample cash — $9.2 billion in free cash flow in 2019, the highest level in almost a decade — and deals look cheaper as shares in copper-heavy Freeport and First Quantum Minerals Ltd. have roughly halved since 2018. Perhaps, though, not cheap enough to warrant wrestling with Freeport’s U.S. liabilities or First Quantum’s Zambian operations.Rio isn’t shrinking quite yet. It has exploration projects, and iron-ore production already did better in the second half, albeit still short of the company’s ultimate target. Yet with Oyu Tolgoi mired in arbitration and geological complexities, and the economy swiftly shifting, it might be time for Rio to consider just how creative it can get.To contact the author of this story: Clara Ferreira Marques at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Rio Tinto 2019 full year results presentation slides are available at https://www.riotinto.com/invest/financial-news-performance/regulatory-filings
Rio Tinto Chief Executive J-S Jacques said "We have again delivered strong financial results with underlying EBITDA of $21.2 billion, underlying EBITDA margin of 47% and return on capital employed of 24%. This performance allows us to return a record final ordinary dividend of $3.7 billion, resulting in a full-year ordinary dividend of $6.2 billion and total cash returns of $7.2 billion.