Rio Tinto invests US$498 million to boost US copper supply

While lithium is attracting most of the attention in the global critical minerals development race, Rio Tinto (ASX: RIO) has again highlighted the key role copper is playing.

In a move the mining giant says will significantly boost its supply of copper in the United States, the company has elected to outlay US$498 million (A$733.5 million) on an upgrade of its underground developments at the Kennecott operation near Salt Lake City in Utah.

The funding is targeting significant new underground development and infrastructure for an area known as the North Rim Skarn (NRS).

The company is aiming for a start-up of production from the NRS in 2024.

That is expected to eventually create a further 250,000 tonnes of additional mined copper over the next 10 years alongside the project’s open cut operations.

Increasing underground focus

The latest Kennecott funding follows Rio Tinto September 2022, decision to invest US$55 million (A$88.9 million) to start underground mining in an area known as the Lower Commercial Skarn (LCS).

That investment culminated in the commencement of underground production within LCS in February 2023.

The project is expected to deliver a total of around 30,000 tonnes of additional mined copper up to 2027.

BEV technology focus

Rio is one of the leading and longest running copper producers in the US.

Kennecott has been mining and processing minerals from the Bingham Canyon Mine ore body since 1903 and today is one of the top producing mines in the world and it is also one of the “greenest”.

Rio says its two recent Kennecott investments will support the building of a world class underground mine which will leverage battery electric vehicle (BEV) technology, following a successful trial in 2022.

The company’s studies have confirmed that BEV’s create a safer and healthier workplace for employees underground, while increasing the productivity of the mine and reducing emissions from operations.

The company is also banking on a US$300 million (A$441.5 million) rebuild at the Kennecott smelter to help reduce its carbon footprint.

The rebuild is the largest in Kennecott’s history and commenced in May 2023.

A further US$120 million (A$176.2 million) is being invested to upgrade the refinery tank house structure and update Kennecott’s molybdenum flotation circuit with a state-of-the art, fully automated system.

Rio Tinto Copper chief operating officer Clayton Walker said these upgrades will allow Kennecott to continue to deliver a high-quality product to customers.

“We are investing to build a world class underground mine at Kennecott and strengthen our processing facilities, to meet the growing demand for copper in the United States, a key material for domestic manufacturing and the energy transition,” he said.

Rio updates Kennecott underground numbers

Rio’s updated NRS indicated mineral resource currently sits at 10.8 million tonnes at 2.93% copper, 1.20 grams per tonne gold, 65.97g/t silver, 0.008% molybdenum.

The inferred mineral resource is estimated at 7.7 million tonnes at 3.13% copper, 0.96g/t gold, 18.41g/t silver, and 0.005% molybdenum.

With an initial probable ore reserve of 3.0 million tonnes at 2.39% copper, 1.77g/t gold, 18.59g/t silver, and 0.010% molybdenum.

Copper a critical mineral

The United States Geological Survey (USGS) says copper will play an essential role in the transition to the low-carbon economy. It notes that a single 1 megawatt wind turbine uses three tonnes of copper.

The agency forecasts that global demand for copper is set to grow between 1.5% to 2.5% per year, driven by electrification and increasing requirements for renewable energy.

The USGS says refined copper stocks in the United States totalled 70,000 tonnes at the end of March 2023, 13% greater than those in February.

However, that was a major decrease of 47% from those in March 2022.

In March 2023, mine output of recoverable copper in the United States was 97,700 tonnes.

The average daily mine production was 3,150 tonnes, a 5% decline from that in February and 7% lower than that in March 2022.