Why Rio Tinto’s copper production was a slight miss



Marginal miss

Rio Tinto’s mined and refined copper production was a slight miss versus upgraded guidance. Let’s explore what led to this marginal miss.

  • Kennecott Utah Copper: Mined copper production for 2014 was comparable to 2013. However, it was lower in the fourth quarter compared to the previous quarter and fourth quarter of 2013. The main factors were lower grade and throughput, as mine production was aligned to smelter requirements during its planned shutdown.
  • Escondida: Increased mill throughput during the year and increased ore stacked for leaching resulted in copper production being in line with 2013, despite lower grades. Sulphide ore delivered to the concentrator during the fourth quarter was lower than expected, primarily as a result of process water restrictions.
  • Oyu Tolgoi/Turquoise Hill Resources: Production in 2014 was 148,400 tons of copper and 588,700 ounces of gold in concentrates. Rio Tinto’s share was 49,800 tons and 197,300 ounces, respectively. These increases in production compared to 2013 (94% and 275%, respectively) were due to higher copper and gold grades, higher throughput, and a full year of production.
  • Grasberg: Based on the latest available forecast from Freeport-McMoRan (FCX), approximately 770,000 tons of copper and 2,300 ounces of gold production in 2014 has been attributed to Rio Tinto.
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FCX reported slightly weaker copper volumes for the December 2014 quarter in the results released on January 27, 2015. Southern Copper (SCCO) is expected to report in early February. BHP Billiton’s (BHP) copper production recovered in 4Q14 when it increased 9% quarter-over-quarter after a weak September quarter. FCX forms 3.34% of the SPDR Metals and Mining ETF (XME), which invests in the diversified metals and mining companies.


As of December 31, 2014, the Group had an estimated 423 million pounds of copper sales that were provisionally priced at 287 cents per pound. The final price of these sales will be determined during the first half of 2015. This compares with 254 million pounds of open shipments as of December 31, 2013, provisionally priced at 333 cents per pound.


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