Rio Tinto Group’s copper head says he sees much more value in building mines rather than buying existing assets — comments that may disappoint industry observers anticipating another spate of mining dealmaking.
The world’s second-largest mining company is looking to reach copper production of 1 million metric tons within five years — up from from about 700,000 tons. The increase would come as Rio Tinto ramps up in Mongolia, expands in Utah and engages in exploration around the world, including a venture in Chile with Codelco.
“For us, the focus is organic growth, supply growth and where in projects can we partner rather than necessarily acquiring an existing production,” veteran executive Bold Baatar said Tuesday in an interview from the sidelines of the CRU World Copper Conference in Santiago.
Even though projects are becoming more expensive and time consuming to develop, they are still cheaper than making acquisitions, said Baatar, who was recently named as Rio’s next chief commercial officer. He gave the example of a Chile copper mine built for $20,000 per metric ton of production versus some public companies that trade around $60,000 a ton.
Industry consolidation only makes sense if it expands supply of the wiring metal, given expectations that the energy transition will accelerate demand growth in the coming years.
“Just bringing one and one together doesn’t add more copper,” Baatar said. “The key question is how can we bring more supply.”
(By James Attwood and Jack Farchy)
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