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Rio Tinto's $5 billion bet on copper

Friday, May 06, 2016 - 01:34

Rio Tinto is pushing to become a global copper powerhouse after giving the green light to a $5.3 billion expansion of the Oyu Tolgoi mine in Mongolia, despite copper prices languishing near seven year lows. Kirsty Basset reports.

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We might be in the middle of one of the worst commodity downturns in decades. But that's not stopping global miner Rio Tinto from making a big bet on copper. It's given the green light to a $5.3 billion expansion of the Oyu Tolgoi mine in Mongolia's Gobi Desert And the company is taking a long view - as copper prices languish close to seven year lows. (SOUNDBITE)(English) ASSOCIATE EDITOR, REUTERS BREAKINGVIEWS, ANDY CRITCHLOW SAYING: "Rio are looking at the demand cycle for copper and they think along with a lot of miners that by 2025 this surplus in copper we have at the moment is going to turn into quite a big deficit. Some people are predicting a 5 million tonne deficit by 2025." Last year the company saw 87 per cent of its underlying earnings come from iron ore. As that market reaches saturation, it's looking to copper to provide new growth. But will it be the start of a new glut? (SOUNDBITE)(English) ASSOCIATE EDITOR, REUTERS BREAKINGVIEWS, ANDY CRITCHLOW SAYING: "What it could do as well is trigger this rush into investing in new copper resources, and we've seen this in iron ore." Either way, the investment is seen as good news for Mongolia. (SOUNDBITE)(English) ASSOCIATE EDITOR, REUTERS BREAKINGVIEWS, ANDY CRITCHLOW SAYING: "This is going to be transformative for the Mongolian economy. It's going to bring a lot of foreign currency earnings into Mongolia, it's going to bring a lot of foreign investment with it, create jobs. And it's really going to transform an economy which hasn't changed much in the last 100 years." Rio will be hoping to access 25 billion pounds of copper and 12 million ounces of gold once production starts in 2020.

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Rio Tinto's $5 billion bet on copper

Friday, May 06, 2016 - 01:34