“It is early days and we have more work to do, but the initial results from drilling are pretty encouraging,” Chief Executive Jean-Sébastien Jacques said on Wednesday, after Rio posted its highest annual underlying earnings since 2014. “What is clear is there’s a lot of copper, a lot of gold, a lot of silver, and I’m really looking forward to the second phase [of drilling].”
The copper-gold-silver discovery, a potential major boost for the company’s growth options, is about 130 km. from Newcrest’s Telfer copper-gold mine in the East Pilbara. It’s also close to numerous copper prospects discovered recently by juniors and 350 km southeast of Port Hedland, the world’s largest bulk export port.
Rio said it had already drilled 24 holes and found mineralization close to the surface, adding it will continue extensive drilling in months to come as part of its $250 million exploration program.
Analysts have questioned Rio’s ability to scale up its copper business quickly without making an expensive acquisition. The company recently had to delay first production from the $5.3 billion underground expansion of its Oyu Tolgoi copper-gold-silver mine in Mongolia. Originally scheduled for early 2020, it’s now expected to happen in the third quarter of 2021.
In December, Rio sold its entire interest in the Grasberg mine in Indonesia, the world’s second-biggest copper mine, as part of a deal that put an end to years of disagreements between operator Freeport McMoRan (NYSE:FCX) and the country’s government.
Rio Tinto believes the copper market will go into deficit by 2020 as it faces declining supplies and increasing demand coming from the electric vehicles sector, infrastructure and renewable technologies.
The announcement comes barely three months after rival BHP (ASX, LON, NYSE: BHP), the world’s number one miner, made an exceptionally rare public disclosure of drilling results from a very early-stage exploration program in South Australia.
Experts have called that find since “the thickest high-grade copper intersection seen in years.”