Rio Tinto earnings face hit after mine slide
Rio Tinto's earnings will take a hit of close to 3 per cent in 2013, based on the expected impact of a wall collapse at one of the company's copper mines in the US.
The wall slide struck Rio's Bingham Canyon mine in Utah on April 10, and while no employees were hurt, Rio said on Tuesday the impact on copper mining and refining would be "significant".
In numerical terms the amount of copper refined in 2013 will fall by more than a third, from 305,000 tonnes to 200,000. Rio's copper division was expected to deliver close to $US2.3 billion of earnings before interest and tax in 2013, and RBC analyst Chris Drew said the lost production would equate to a 2.5 per cent hit to earnings before interest and tax.
Mr Drew said there were likely to be further costs associated with remediation and repairs.
Reports have previously suggested some equipment and trucks were damaged in the slide.
The amount of copper mined is tipped to fall by 125,000 tonnes to 540,000. Copper ranks as Rio's second most lucrative commodity behind iron ore, which was responsible for most of the company's earnings in 2012.
Rio produced about 48.2 million tonnes of iron ore from its operations in Canada and Western Australia during the three months to March 31, about 7 per cent lower than the December quarter.
Reduced production volumes had been expected given that multiple cyclones blew through WA's Pilbara region during the quarter.
Rio's plan to expand its Pilbara iron ore business to have an export capacity of 360 million tonnes of iron ore per year by early 2015 remains on track.
Exports of thermal coal and coking coal from Australia slipped lower than the December quarter, and were partially affected by wet weather and flooding in the nation's north-east.
The wall slide at Bingham Canyon was the last thing Rio needed in what is already shaping as a difficult year for it. Rio has already announced close to $US14 billion of impairments and changed its chief executive this year and was recently forced to scale back its most important growth project - Oyu Tolgoi - after ongoing difficulties with the Mongolian government.
Rio shares have fallen almost 20 per cent since January 1 and the company is reportedly seeking to sell numerous assets including Australian coal mines, Australian copper and gold mines, aluminium assets and possibly its iron ore business in Canada.
Shares in Rio closed 11¢ lower at $54.98.