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Rio Tinto (RIO) Begins Underground Production at Oyu Tolgoi
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Rio Tinto plc (RIO - Free Report) announced that it has started underground production from the Oyu Tolgoi copper mine in the Gobi Desert. This marks a significant step toward ramping up Oyu Tolgoi to become one of the world’s leading copper suppliers.
Rio Tinto received a 66% direct interest in the world-class Oyu Tolgoi mine following the completion of its acquisition of Turquoise Hill Resources Ltd for approximately $3.1 billion in December 2022. The remaining 34% stake in the Oyu Tolgoi project is held by the government of Mongolia.
Since January 2023, RIO has been working directly with the government of Mongolia to expedite the Oyu Tolgoi project. So far, 30 draw bells have been blasted and the ore is currently being processed from Panel Zero in Hugo North Lift 1.
Developing the underground mine calls for an investment of more than $7 billion. Production will ramp up over the coming years and Oyu Tolgoi is expected to produce around 500,000 tons of copper annually from 2028 to 2036 from the open pit and underground. This will likely help produce around 6 million electric vehicles in a year.
By 2030, Oyu Tolgoi is expected to become the fourth-largest copper mine in the world, operating in the first quartile of the copper equivalent cost curve. This project will aid Rio Tinto in capitalizing on the growing demand for copper. Copper prices have been impacted in 2022 by heightened concerns over a global economic slowdown and the resurgent COVID restrictions in China, which is the top consumer of the metal. However, prices are regaining ground lately fueled by worries about low supply from South America amid expectations of a pickup in industrial demand in China.
The long-term outlook for copper remains positive as copper demand is expected to grow, driven by electric vehicles, renewable energy and infrastructure investments. However, grade decline, rising input costs, water constraints and scarcity of high-quality developmental opportunities continue to disrupt the industry's supply. This demand-supply imbalance will support copper prices in the future.
Price Performance
Image Source: Zacks Investment Research
In the past year, shares of Rio Tinto have fallen 14% compared with the industry’s 17.1% decline.
Some other top-ranked stocks in the basic materials space include Steel Dynamics Inc. (STLD - Free Report) , Olympic Steel Inc. (ZEUS - Free Report) and Nucor Corporation (NUE - Free Report) .
Steel Dynamics currently sports a Zacks Rank of 1. STLD’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3% on average. STLD has rallied around 23.2% in a year.
Olympic Steel currently sports a Zacks Rank of 1. ZEUS’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 26.2% on average. ZEUS has rallied around 51.7% in a year.
Nucor currently carries a Zacks Rank of 2. NUE’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 7.7% on average. NUE has rallied around 20.5% in a year.
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Rio Tinto (RIO) Begins Underground Production at Oyu Tolgoi
Rio Tinto plc (RIO - Free Report) announced that it has started underground production from the Oyu Tolgoi copper mine in the Gobi Desert. This marks a significant step toward ramping up Oyu Tolgoi to become one of the world’s leading copper suppliers.
Rio Tinto received a 66% direct interest in the world-class Oyu Tolgoi mine following the completion of its acquisition of Turquoise Hill Resources Ltd for approximately $3.1 billion in December 2022. The remaining 34% stake in the Oyu Tolgoi project is held by the government of Mongolia.
Since January 2023, RIO has been working directly with the government of Mongolia to expedite the Oyu Tolgoi project. So far, 30 draw bells have been blasted and the ore is currently being processed from Panel Zero in Hugo North Lift 1.
Developing the underground mine calls for an investment of more than $7 billion. Production will ramp up over the coming years and Oyu Tolgoi is expected to produce around 500,000 tons of copper annually from 2028 to 2036 from the open pit and underground. This will likely help produce around 6 million electric vehicles in a year.
By 2030, Oyu Tolgoi is expected to become the fourth-largest copper mine in the world, operating in the first quartile of the copper equivalent cost curve. This project will aid Rio Tinto in capitalizing on the growing demand for copper. Copper prices have been impacted in 2022 by heightened concerns over a global economic slowdown and the resurgent COVID restrictions in China, which is the top consumer of the metal. However, prices are regaining ground lately fueled by worries about low supply from South America amid expectations of a pickup in industrial demand in China.
The long-term outlook for copper remains positive as copper demand is expected to grow, driven by electric vehicles, renewable energy and infrastructure investments. However, grade decline, rising input costs, water constraints and scarcity of high-quality developmental opportunities continue to disrupt the industry's supply. This demand-supply imbalance will support copper prices in the future.
Price Performance
Image Source: Zacks Investment Research
In the past year, shares of Rio Tinto have fallen 14% compared with the industry’s 17.1% decline.
Zacks Rank & Other Stocks to Consider
Rio Tinto currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the basic materials space include Steel Dynamics Inc. (STLD - Free Report) , Olympic Steel Inc. (ZEUS - Free Report) and Nucor Corporation (NUE - Free Report) .
Steel Dynamics currently sports a Zacks Rank of 1. STLD’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3% on average. STLD has rallied around 23.2% in a year.
Olympic Steel currently sports a Zacks Rank of 1. ZEUS’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 26.2% on average. ZEUS has rallied around 51.7% in a year.
Nucor currently carries a Zacks Rank of 2. NUE’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 7.7% on average. NUE has rallied around 20.5% in a year.