Rio Tinto PLC (LON:RIO) has warned of a costly delay to the start of production at a key copper project and reported a 3.5% drop in second-quarter iron ore shipments.
The first of three mining giants to report on half-year progress this week, Rio said the impact of tropical cyclone Veronica in late March hit output in the following three months to June.
READ: Rio Tinto once again cuts guidance for 2019 iron ore shipments from Australia
Iron ore production from the Pilbara region of Australia came out at 79.7mln tonnes in the second quarter, which was down 7% compared to the same period last year, though up 5% on the first three months of this year.
Half-year iron ore production was down 8% on this time last year, with shipments down 8% too.
The FTSE 100 group also reported a 13% decline in copper production in the second quarter, flat aluminium and bauxite up 1%.
Titanium production was up 31% and production from Canada was continuing to recover after labour strikes in the corresponding period last year, though guidance was revised down slightly.
Costly delay
More significantly, Rio put out a separate statement warning of a delay of 16-30 months for the start of sustainable production at its Oyu Tolgoi underground mine in Mongolia.
A delay out to between May 2022 and June 2023 will come with increased costs of US$1.2bn-$1.9bn to an expected total of US$6.5bn-US$7.2bn.
The reason for the delay is that some stability risks have been identified in the current mine design, with other mine design options possibly resulting in some underground infrastructure being relocated or removed.
With several issues still undecided, the definitive estimate of cost and schedule for the remaining underground project is now expected to be delivered in the second half of 2020.
Tössing Rössing
In a third statement on Tuesday, Rio confirmed that it has completed the sale of its entire interest in the Rössing uranium mine in Namibia to China National Uranium Corporation (CNUC) for $6.5mln in cash plus a payment of up to $100mln contingent on uranium prices over the next seven years.
Rio will also receive a cash payment if CNUC sells the Zelda 20 mineral deposit during a restricted period following completion.
This brings total divestment proceeds since 2017 to $11.2bn, of which $9.7bn has been returned to shareholders.