Posted on 18 Jul 2022
Rio Tinto said Friday uncertainty surrounding the global economy and China’s Covid-zero policy weighed on the prospects of copper demand in Q2 2022, Kallanish reports.
Prices started trending down in late April, after reaching a record quarterly average price in Q1. The LME copper price declined 20% at the end of the second quarter to $3.74/pound.
The miner’s average realised copper price in Q2 was $4.41/lb, which is 2.6% lower than $4.53/lb in Q1. However, prices were 7.15% higher in the first half of the year at $4.47/lb, compared to an average of $4.15/lb in the same period in 2021.
With the economic outlook weakening, Rio Tinto expects further headwinds to challenge commodities prices. Trade disruptions, food protectionism and the global focus on energy supply security continue to pressure supply chains, which will need to be significantly eased before inflationary pressures subside, it adds.
“Exchange inventories remain at multi-year lows, and mine supply continues to face disruptions,” the company says, noting however that “mine project start-ups in the second half should help alleviate market tightness.”
In Q2, Rio Tinto mined production of the red metal crucial to the energy transition increased 9% year-on-year to 126,000 tonnes. The volume reflects higher material movement and higher grades and recoveries at Kennecott (US) and Escondida (Chile), also partially offset by lower grades and recoveries at Oyu Tolgoi (Mongolia) as a result of planned mine sequencing.
The company is targeting production of 500,000-575,000 t of copper this year, up from the 494,000 t mined last year. The guidance for refined copper stands at 230,000-290,000 t this year, up from 202,000 t in 2021. C1 unit cost guidance is set at $1.30-1.50/lb.
Most of its copper exploration focus last quarter was in Australia, Peru and Zambia. For nickel, that was Canada and Finland. Rio Tinto says it continues “to explore all options” in the Jadar lithium project in Serbia, halted due to popular opposition. The company is also considering “a smaller start-up to accelerate market entry” in Argentina, following its March acquisition of the Rincón lithium project.
Source:Kallanish
