Rio Tinto approves $55m start to underground work at Kennecott

Rio Tinto has approved a $55m investment in development capital to start underground mining and expand production at its Kennecott copper operations in Utah, it announced on Tuesday.

The FTSE 100 company said underground mining would initially focus on an area known as the Lower Commercial Skarn (LCS), which would deliver around 30 kilotonnes of additional high-quality mined copper through to 2027, alongside open-cut operations.

It said the first ore was expected to be produced in early 2023, with full production in the second half of the year.

The company said it would be processed through the existing facilities at Kennecott - one of only two operating copper smelters in the United States.

Rio Tinto said Kennecott held the potential for “significant and attractive” underground development.

The LCS was the first step towards that , with a mineral resource of 7.5 million tonnes at 1.9% copper, 0.84 grams of gold per tonne, 11.26 grams of silver per tonne, and 0.015% molybdenum identified based on drilling and a probable ore reserve of 1.7 million tonnes at 1.9% copper, 0.71 grams of gold per tonne, 10.07 grams of silver per tonne, and 0.044% molybdenum.

Underground battery electric vehicles were currently being tested at Kennecott, to improve employee health and safety, increase productivity and reduce carbon emissions from future underground mining fleets.

A battery electric haul truck and loader supplied by Sandvik Mining and Rock Solutions were being used to evaluate performance and suitability as part of underground development work.

“This investment will allow us to quickly bring additional volumes of high quality copper to the market and build our knowledge and capabilities as we evaluate larger scale underground mining at Kennecott,” said Rio Tinto Copper chief executive Bold Baatar.

“We are progressing a range of options for a significant resource that is yet to be developed at Kennecott, which could extend our supply of copper and other critical materials needed for electric vehicles and renewable power technologies.

“Trialling underground battery electric vehicles is an exciting step in our work to create a safer workplace for our employees, increase the productivity of the mine and reduce emissions from our operations.”

The company said existing underground infrastructure was currently being extended to enable early access to the next underground resource and undertake characterisation studies.

A feasibility study to inform decisions on the next phase of underground production was expected to be completed in 2023.

It would be one of several potential stages currently being investigated, the firm added.

Feasibility studies were also being progressed to extend open-pit mining at Kennecott beyond 2032.

At 0916 BST, shares in Rio Tinto were up 1.99% at 4,791.5p.

Reporting by Josh White at Sharecast.com.