Chile, Indonesia problems hit Rio Tinto Q1 copper production

Rio Tinto said first quarter copper production fell 37% month on month and year on year due to issues at its mines in Chile and Indonesia.

Rio cut its mined copper guidance to between 500,000 and 550,000 tonnes for the year from its previous guidance of between 525,000 and 665,000 tonnes.

Mined and refined copper production at Escondida in Chile was hit by a labour strike for 43 days between February and March. Rio said the current labour agreement has been extended for 18 months and expected operations would ramp-up to normal production levels by July 2017.

In Indonesia, production was impacted by new government regulations on exports of unrefined metals, including copper concentrates, and “other matters related to the mining sector”, Rio said.

“The regulations impact PT Freeport Indonesia's (Rio's joint venture partner) operating rights, including its right to continue to export concentrate without restriction, and, as a result, may have a significant impact on Rio Tinto's share of production in 2017,” the company said.

“In the absence of an export permit, PTFI has had to reduce production to around 40% to match domestic smelting capacity.”

“This has resulted in near-term actions to reduce its workforce, significantly reduce costs and reduce and/or suspend capital expenditure on its underground development projects and new smelter."

Rio said it would consider legal action to enforce its contractual rights if it failed to reach agreement with the Indonesian government.