Gold Drops to $1,200/oz for First Time Since June in New York
Rio Sees 100,000 Ton Refined Copper Cut After Utah Mine Slide
Rio Tinto Group (RIO), the world’s second-biggest mining company, said the wall slide at its copper mine in Utah may cut full-year refined output by about 100,000 metric tons, slicing its previous forecast by about one third.
Ore production at Kennecott Utah Copper’s Bingham Canyon mine remains suspended and the timing of a restart is being studied, London-based Rio Tinto said today in its quarterly production report. A pit wall failure occurred on April 10 after the slide occurred along a geotechnical fault line.
The outage could leave the global copper market balance “quite tight” this year, Nomura International Plc said last week. Bingham Canyon, the world’s biggest man-made hole, has an annual production capacity of as much as 300,000 tons a year of the metal used in tubes and wiring, according to Rio’s website. Last year, the mine produced 163,200 tons.
“It is estimated that 2013 mined and refined copper production at Kennecott Utah Copper will be less than previously anticipated by approximately 125,000 tons and 100,000 tons, respectively,” the company said. “As a result, Rio Tinto share of mined and refined copper production in 2013 is expected to be approximately 540,000 tonnes and 205,000 tonnes, respectively.”
Rio dropped 0.2 percent to close at A$54.98 in Sydney. BHP Billiton Ltd. (BHP), the world’s biggest mining company, fell 0.5 percent. The price of copper in London gained 0.5 percent to $7,235 a ton at 3:58 Sydney time. It has dropped 11 percent in the past six months.
Producers are struggling with falling ore grades at aging mines, while new large discoveries are scarce, bolstering the outlook for prices. Rio Tinto’s $6.6 billion Oyu Tolgoi copper mine is still scheduled to start commercial production in June, subject to resolution of a number of issues with the government, the company said today. First concentrate was produced in January, it said.
Copper will have a surplus of 154,000 tons this year, JPMorgan Chase & Co. said in an April 12 report.
Rio reported a more-than-estimated 6 percent rise in iron ore output as the company expanded mines in Australia. Its share of production was 48.3 million tons, from 45.6 million tons a year earlier, beating the 47.7 million-ton median estimate of six analysts surveyed by Bloomberg and compares with the 52 million tons produced in the previous quarter.
Equity and commodity markets tumbled after China, the biggest metals user, yesterday reported economic growth unexpectedly lost momentum last quarter, further pressuring profit expectations for global miners. BHP Billiton said last week it expects annual Chinese GDP growth to moderate toward 6 percent later this decade.
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