A 50% increase in copper production and an 18% reduction in cash costs helped
The major reported net earnings of $34 million (or 31 cents per share) on revenue of $2 billion, down from earnings of $81 million ($1.19 per share) on revenue of $1.8 billion in 1997. Copper production increased last year to 373 million lbs., while average cash costs fell to US51 cents per lb.
The weak copper market has not quelled the major’s appetite for expansion.
Along with partners
A banking syndicate has agreed to provide US$600 million, or about 50% of the project financing, subject to certain conditions. The balance is being negotiated with an international group of import- and export-credit agencies.
Bechtel Group has been awarded the engineering, procurement and construction management contract for the project. Late last year, the partners announced that concentrates would be transported by pipeline, rather than truck, 300 km to the port of Huarmey. This change is expected to reduce cash costs to US35 cents per lb. and raise capital costs to US$2.35 billion.
Antamina hosts a resource of 500 million tonnes grading 1.2% copper, 1% zinc, and 0.03% molybdemun, plus 12 grams silver per tonne. It is expected to produce an average of 600 million lbs. copper and 360 million lbs. zinc annually over a 20-year mine life. Rio Algom and Noranda each hold 37.5% of the operating company, while Teck has a 25% stake.
In nearby Chile, Rio Algom recently completed an expansion program at the Cerro Colorado mine. The operation produced 165 million lbs. last year at a cash cost of US46 cents per lb. Production is expected to increase to 220 million lbs. this year.
The company reported a $5-million loss from its 25% interest in the Alumbrera copper-gold mine in Argentina, which entered commercial production a year ago. While the open-pit mine reached design rates of production by year-end, results were hampered by weak prices and the lengthy ramp-up period.
Alumbrera turned the corner in the last quarter of 1998, when Rio’s share of production reached 29 million lbs., exceeding the average quarterly design capacity of 25 million lbs. Earnings of $1 million were recorded for this period, owing to a reduction in cash costs to US48 cents per lb. from US60 cents a year earlier, and an increase in throughput to 82,300 tonnes per day (better than the design rate of 80,000 tonnes). Copper recoveries approached the design level of 91%, while gold recoveries exceeded the design rate of 70%.
Rio posted an operating loss of $3 million in the 1998 fourth quarter from its share of the Highland Valley copper mine in British Columbia. Operations will be suspended later this spring until copper prices improve.
Be the first to comment on "Rio boosts production, cuts costs"