Rio Tinto is investing $1.5 billion in the Salt Lake City-based Kennecott copper mine to extend its life until at least 2032. The move reinforces its bet on America and will guarantee job security for thousands of workers.
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“Today I look at our market share, we may be 10 percent of the market share in the U.S. It's a very profitable market for us. And therefore, investing $1.5 billion in this mine makes an awful lot of sense" Rio Tinto CEO JS Jacques told FOX Business exclusively.
The investment will allow the mining giant to tap a new area of the ore body and help with the extraction of critical minerals – including rhenium, which is necessary for the defense industry and the building of fighter jets, among other things. Once the investment is complete, the mine is expected to produce approximately 1 million tons of copper between 2026 and 2032.
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“Copper is absolutely essential, it's a commodity of the future, and the U.S. market is very important for us” Jacques noted. Copper is closely watched by traders and economists to measure industrial demand, key for economic growth.
The project will allow thousands of employees to keep their jobs for at least the next 10 years, and the company is looking to extend the life of the mine beyond 2032.
Utah Gov. Gary Herbert welcomed the Kennecott investment, which he says will "continue to fuel economic growth and employment for many years."
And while Rio Tinto has big plans for its Kennecott mine, that is only part of its U.S. investment story.
The company’s Resolution Copper project is a proposed copper mine that is currently the largest international investment undergoing permitting in the U.S. While not expected to be completed until the middle part of the 2030s, Resolution Copper would come at a price tag of about $8 billion and create approximately 3,000 new jobs.
Rio is planning to connect Resolution, which would be the U.S.’ fourth copper smelter, with its Kennecott smelter in Salt Lake City. Rio is expected to account for approximately 25 percent of the U.S.’ copper needs once the two projects are completed.
In 2018, U.S. mine production of recoverable copper fell by 5 percent to an estimated 1.2 million tons, according to the U.S. Geological Survey’s mineral commodities summary. The total value of the copper produced was about $8 billion. Last year, the U.S. produced about 600,000 tons less than it consumed.
“By doing more investment either in Salt Lake City or in Arizona, we would be able to close part of the gap in terms of copper supply to the U.S.,” Jacques said.
“We've been in the U.S. for more than 100 years. We like the market. We want to be part of the solution and that's where we're putting the money.”
In May, Rio Tinto announced plans to reduce the carbon footprint of its Kennecott mine by up to 65 percent by closing its coal power plant and buying renewable energy certificates.
Rio Tinto shares are up 13.8 percent year-to-date while the S&P 500 is higher by 24.2 percent.