Rio Tinto Maintains Exploration Spending as Prices Drop

Rio Tinto Group, the world’s second-largest mining company, will maintain greenfield exploration spending this year amid slumping commodity prices.

Spending on exploration in areas without existing operations for all Rio’s commodities will be slightly less than $200 million, little changed from 2014, said Stephen McIntosh, the head of exploration at the London-based company.

“The story of Rio Tinto exploration is really our focus on the long term,” McIntosh said today in an interview in Vancouver. “For the exploration industry, the current tough times just show us that the economic cycle is alive and well.”

Copper prices have fallen 24 percent in past year, with iron ore and coal trading near five-year lows. Rio cut its exploration and evaluation spending by 19 percent to $765 million last year, with McIntosh saying he expects greenfield exploration spending across the industry to decline further as companies preserve cash or focus on ares near existing mines.

“It’s clear that the producers are all under pressure to increase shareholder returns,” he said.

Rio Tinto’s focus this year will be on exploring for copper in North and South America, McIntosh said.

“We’re probably somewhat overweight on copper exploration,” he said. “That’s because the company has a reasonably bullish mid-term view on copper.”

The copper group accounted for a third of Rio’s exploration spending last year, with drilling carried out on prospects in Utah, Arizona and Montana in the U.S. and at sites from Peru to Zambia. Reconnaissance mapping was carried out on copper targets in Russia, while a joint venture with Aluminum Corp. of China carried out geophysical surveys and drilling in China, the company said.

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