SP Angel Morning View -Today’s Market View, Thursday 16th January 2025

Copper prices rise on Chinese restocking as Chile cuts copper production outlook

MiFID II exempt information – see disclaimer below

SP angel received great news last week from the LSEG StarMine commodities forecast polling team

• SP Angel – 1^st in LSEG StarMine Precious Metals poll for 2024
• SP Angel – 2^nd in LSEG StarMine Base Metals poll for 2024

Anglo Asian Mining* (AAZ LN) – BUY, 308p – AGL and FLO circuits resumption lifts 4Q24 production

Antofagasta (ANTO LN) – Gold by-product credits in Q4 help to contain cash costs for the full year

Arc Minerals (ARCM LN) – Licence approval in Zambia

Arras Minerals  (ARK CN) – Initial drilling results from Elemes project, Kazakhstan

First Quantum (FM CN) – 2024 production results and 2025-2027 guidance

Great Southern Copper (GSCU LN) – Progress of Cerro Negro Drilling

KEFI Gold and Copper (KEFI LN) – New exploration license secured in Saudi Arabia

Metals Exploration (MTL LN) – Quarterly update following acquisition of Condor Gold

Rio Tinto (RIO LN) – CEO highlights strong progress on delivering organic growth in 2024

Copper ($9,261/t) prices rise on Chinese restocking as Chile cuts copper production outlook

• Copper prices have been rising through the new year, climbing over $9,261/t this morning.
• Bloomberg reports Chile cut production projections for the coming decade, expecting 5.54mt by 2034, vs previous projections of 6.43mt.
• The agency suggests they have taken a ‘more realistic’ approach to modelling future project development.
• Cochilco expects Chile’s global share to rise to 27% over the next decade, vs 24% now, peaking at 6.07mt in 2027.
• Copper inventories are sliding as traders take metal off exchanges.
• Shanghai inventories have fallen from over 330kt last summer to 74kt in December.
• However, speculative positions are relatively flat, with much of the move likely reflecting tariff concerns on COMEX from the incoming Trump administration.
• Reuters reports a marginal net-long position in CME futures, having flipped from a marginal net short position in December.
• Open interest is limited, suggesting speculative funds have rotated elsewhere.
• Meanwhile, China refined copper imports rose to a 13-month high in December, and the Yangshan copper premium, which reflects import appetite, rose to twelve month highs this month.

Gold prices ($2,704/oz) push higher as Chinese yields continue to slide and dollar bounces

• Gold prices have climbed higher again, breaking through the key $2,700/oz level.
• The move was triggered following in-line CPI data, which allayed some concerns over runaway inflation in the US.
• This pushed US Treasury yields and the dollar lower yesterday, but the dollar has since regained its ground.
• Meanwhile the 10 year yield has held lower at 4.66%.
• We are seeing a close correlation with gold’s strength and Chinese government bond strength.
• The Chinese 10 year rallied again last night, with the yield sliding to 1.65%.
• Chinese safe haven investors continue to buy gold to diversify away from their weakening Yuan and the ongoing bear market in property and equities.
• Scott Bessent, the Treasury Secretary Elect, is due to speak in front of Congress today, who is expected to emphasise the role of the dollar.
• Bloomberg reports Bessent will state that ‘critically, we must ensure that the US dollar remains the world’s reserve currency.’
• Trump has previously criticized the role of a strong dollar on US manufacturing, seeing the currency weaken 12% in his first year in office during the previous term.
• The BRIC nations continue to work towards diversification away from the dollar, a theme which helped push gold to record highs in the lead up to their October summit.
• Bessent will also highlight plans ot ‘make permanent the 2017 Tax Cuts and Jobs Act and implement new pro-growth poliies to reduce the tax burden on American manufacturers, service workers and seniors.’

Managem sells Oumejrane copper mine for $30m to Purple Hedge Resources, Morocco

• Managem reports the sale of the Oumejrane copper in the Eastern Anti-Atlas of Morocco for $30m in cash plus a further $2m to be made within 12 months of the transaction.
• Purple Hedge DWC is a private mining company which is active in Africa, is based in the UAE and is backed by a private investor and a NY investment fund.
• The mine is located in the Draa-Tafilalt region which hosts other copper-silver and barite deposits with small-scale and artisanal mining activities.
• Oumejrane copper mine sales to end -December 2023 were US$28.0m
• Managem is looking further afield these days with the recent acquisition of the Karita gold project in Guinea from IAMGOLD.
• Atlas Metals Group (formerly MetalNRG) had agreed to acquire Oumejrane but were forced to withdraw due to funding issues.

Economics

US – Consumer inflation came slightly below expectations fuelling a rally in risky assets with Treasury yields pulling back.

• S&P 500 and Nasdaq closed 1.8% and 2.5% on the day with futures also trading higher this morning.
• 10y were down 14bp at one point and is currently trading around 4.66%.
• Markets reinstated expectations for a rate cut in July.
• CPI (%mom, Dec/Nov/Est): 0.4/0.3/0.4
• CPI (%yoy, Dec/Nov/Est): 2.9/2.7/2.9
• Core CPI (%mom, Dec/Nov/Est): 0.2/0.3/0.3
• Core CPI (%yoy, Dec/Nov/Est): 3.2/3.3/3.3

UK – The economy returns to growth but disappoints on the pace of expansion in November fueling concerns that the UK is heading towards stagflation.

• Growth was helped by services and construction more than offsetting a drop in manufacturing.
• GDP climbed 0.1%mom during the month marking the second positive reading in the five months since Labour took office.
• The pound fell on the news trading around 1.22.
• Market estimates for rate cuts from the central bank were unchanged at two 25b reductions for 2025.
• GDP (%mom, Nov/Oct/Est): 0.1/-0.1/0.2

Currencies

US$1.0295/eur vs 1.0299/eur previous. Yen 156.07/$ vs 157.04/$. SAr 18.838/$ vs 18.895/$. $1.221/gbp vs $1.221/gbp. 0.622/aud vs 0.620/aud. CNY 7.332/$ vs 7.332/$

Dollar Index 109.07 vs 109.089 previous

Precious Metals

Gold US$2,700/oz vs US$2,683/oz previous

Gold ETFs 83.2moz vs 83.2moz previous

Platinum US$946/oz vs US$938/oz previous

Palladium US$957/oz vs US$946/oz previous

Silver US$30.8/oz vs US$30.1/oz previous

Rhodium US$4,650/oz vs US$4,650/oz previous

Base metals:   

Copper US$9,226/t vs US$9,111/t previous

Aluminium US$2,631/t vs US$2,564/t previous

Nickel US$15,845/t vs US$15,880/t previous

Zinc US$2,878/t vs US$2,811/t previous

Lead US$1,956/t vs US$1,944/t previous

Tin US$29,790/t vs US$29,135/t previous

Energy:           

Oil US$82.1/bbl vs US$80.2/bbl previous

• Crude oil prices moved back above $80/bbl as US crude inventories tightened by more than expected and new sanctions continue to impact Russian logistics, with news of the Israeli Hamas ceasefire having a limited impact.
• The EIA reported a US inventory draw of 2mb to crude (-1mb exp), offset by builds of 5.9mb to gasoline and 3.1mb to diesel stocks, with refinery utilisation down 1.6% w/w to 91.7% and domestic production of 13.5mb/d.
• The IEA’s January oil market report forecasts global oil demand growth will rise slightly from 0.94mb/d in 2024 to 1.05mb/d in 2025 (104mb/d), with global oil supply increasing from 0.66mb/d to 1.8mb/d in 2025 (104.7mb/d).
• The OPEC January monthly oil report forecasts higher global oil demand growth of 1.4mb/d in both 2025 (105.2mb/d) and 2026, with global liquids supply growth of 1.2mb/d in both 2025 (103.4mb/d) and 2026.
• European energy prices edged lower as EU natural gas storage levels fell by 4.6% w/w to 64.2% full (vs 70.7% 5-Yr average), with aggregate storage at 736TWh after a large 16.8TWh draw in Germany.

Natural Gas €45.7/MWh vs €47.0/MWh previous

Uranium Futures $73.8/lb vs $73.8/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$102.7/t vs US$100.6/t

Chinese steel rebar 25mm US$482.3/t vs US$483.1/t

HCC FOB Australia US$193.7/t vs US$194.5/t

Thermal coal swap Australia FOB US$113.3/t vs US$116.0/t

Other:  

Cobalt LME 3m US$24,300/t vs US$24,300/t

NdPr Rare Earth Oxide (China) US$55,786/t vs US$55,307/t

Lithium carbonate 99% (China) US$10,025/t vs US$10,025/t

China Spodumene Li2O 6%min CIF US$795/t vs US$795/t

Ferro-Manganese European Mn78% min US$1,005/t vs US$1,005/t

China Tungsten APT 88.5% FOB US$338/mtu vs US$338/mtu

China Graphite Flake -194 FOB US$435/t vs US$435/t

Europe Vanadium Pentoxide 98% US$4.6/lb vs US$4.6/lb

Europe Ferro-Vanadium 80% US$25.3/kg vs US$25.3/kg

China Ilmenite Concentrate TiO2 US$290/t vs US$290/t

China Rutile Concentrate 95% TiO2 US$1,071/t vs US$1,071/t

Spot CO2 Emissions EUA Price US$65.1/t vs US$65.1/t

Brazil Potash CFR Granular Spot US$300.0/t vs US$300.0/t

Germanium China 99.99% US$2,725.0/kg vs US$2,725.0/kg

China Gallium 99.99% US$385.0/kg vs US$385.0/kg

Battery News

India to see 12 new EV models in 2025

• Automakers operating in India are expected to launch 12 new EV models this year, with longer driving ranges and faster charging times, to attract buyers as demand for EVs slows down globally.
• EV sales in India grew 20% in 2024, outpacing the growth of total car sales (5%).
• EVs in India only made up about 2.5% of the 4.3 million cars sold in 2024 thanks to high prices and a lack of charging infrastructure.
• India’s five-day auto show in New Delhi starts on Friday with VinFast, BYD, Hyundai, Maruti Suzuki all expected to showcase new EVs

Michigan Governor warns Trump tariffs on Mexico and Canada could harm US auto industry

• Michigan governor, Gretchen Whitmer, has warned that potential 25% tariffs on imports from Mexico and Canada suggested by President-elect Donald Trump could harm the US auto sector.
• The Democratic governor said in a speech in Detroit that imposing tariffs would damage supply chains and slow production lines and would cut “jobs on both sides of the border.
• The top 10 car manufacturers, with Mexican plants, collectively built 1.4m vehicles over the first six months of 2024, with 90% heading across the border to US buyers.

Company News

Anglo Asian Mining* (AAZ LN) 108p, Mkt Cap £129m – AGL and FLO circuits resumption lifts 4Q24 production

BUY – 308p

• 4Q24 production amounted to 8.5koz GEOs, up on 3.0koz produced the previous quarter.
• A recovery in production was led by a resumption of operations at the agitation leaching plant (September) followed by a restart of flotation circuit (November) that are now running at design capacities.
• 4Q24 gold sales totalled 6.0koz (ex PSA) at an average realised price of $2,655/oz  (4Q23: 2.4koz at $2,004/oz).
• 4Q24 copper concentrate sales were 1.2kt (ex PSA) generating $1.5m in by product revenues (4Q23: 2.2kt and $2.3m).
• FY24 production came in at 16.8koz (FY23: 31.8koz) including:
• 15.1koz of gold most of which came from heap leaching as agitation leaching remained suspended through most of the 1Q-3Q period (FY23: 21.8koz);
• 0.4kt of copper with flotation contributing only ~250t, all of which came through in the final quarter, compared to 1.7kt produced in FY23 (FY23: 2.1kt)
• 28koz of silver (FY23: 53koz).
• Annual production came within the previously released guidance for 15.0-19.5koz GEOs.
• The Company had $6.7m in cash at the end of period with $4.0m in unsold gold dore and copper concentrate.
• Net Debt stood at $14.8m, up on $10.2m at the beginning of the year reflecting a temporary suspension of most processing capacities during the year.
• Operations were FCF positive in 2H24 generating $1.1m vs a $4.2m outflow recorded in 1H24.
• Operationally, the team secured access to Demirli and completed a drilling programme verifying mineral inventory for a timely restart of the flotation plant.
• Gilar underground development is ongoing with the team expecting first development ore to be accessed 1Q25, a slight delay on the previous target of 4Q24.
• FY25 guidance will be provided in 1Q25.

Conclusion: The team has done well in resuming operations at agitation leaching and floatation circuits with production in 4Q24 accounting for ~50% of annual output. Additionally, the Company has been careful in managing its cashflow during challenging first nine months of the year as production remained constrained while delivering a positive FCF in 2H24. FY25 guidance to be released in 1Q25 which we would expect to deliver strong production outlook supported by processing of higher grade Gilar ore with a further step up in production expected once Demirli is recommissioned (SPA exp 2026). A ramp up in production coincides with close to record gold prices and strong copper prices. We will be looking to update our commodity price estimates together with production on the release of FY25 guidance.

*SP Angel acts as nomad and broker to Anglo Asian Mining

Antofagasta (ANTO LN) 1,853p, Mkt Cap £18bn – Gold by-product credits in Q4 help to contain cash costs for the full year

• Antofagasta report a marked 12% rise in copper production in Q4 to 200,300t from 179,000t a year earlier.
• Gold production also rose 32% to 68,200oz from 51,800oz due to higher gold grades at Centinela.
• Unfortunately, the higher Centinela gold grades were an aberration as grades were generally lower last year causing 2024 gold production to pull back to 186,900oz
• Molybdenum production also rose slightly by 4% to 2,800t
• Copper sales which inevitably lag production output climbed 8.7% to 191,800t
• Cash costs before by-product credits fell 14% in Q4 to $4,431/t helped by higher production at Centinela and Los Pelambres.
• Lower copper grades at the ageing Los Pelambres mine caused full year cash costs to rise 3% to $5,225/t though this is still a very creditable performance.
• By-product credits rose to $1,720/t in Q4 vs $1,565/t in Q3 on higher gold prices and production. The full-year credit rose 4% to $1,609/t.
• Net cash costs were 2% higher yoy at $3,616/t for the full year but came in at $2,712/t in Q4 marking an impressive 24% fall on Q3.
• Centinela Second Concentrator: Foundation works concrete pouring has started at the site with equipment being shipped to Chile.
• Los Pelambres: New concentrate pipeline construction is ongoing. Doubling of the desalination plant capacity is also due to start shortly.
• Management also filed an EIA relating to the addition of a further 15 years of capacity at the El Mauro tailings dam.
• Outlook: Management are targeting of 660,000-700,000t of copper with 210,000-230,000oz of gold and 15,000-16,500t of molybdenum.
• Cash costs before by-product credits are expected to improve to $4,960-5,401/t.
• Net cash costs after by-product credits are estimated to rise to $3,197-3,638/t.
• Capex: excluding Zaldívar estimated to be $3.9bn

Conclusion: Antofagasta continues to report solid results helped by higher gold prices and production in Q4. The capital spend should enable ongoing growth and we look forward to another positive year of performance from the group.

Arc Minerals (ARCM LN) 1.4p, Mkt cap £20m – Licence approval in Zambia

(Handa Resources Limited is owned 70% by Anglo American and 30% by Arc Minerals with Arc’s interest held by Unico Minerals Ltd. Unico is owned 67% by Arc Minerals and 33% held by Kopara Investments.. Arc’s resulting ownership of Handa is therefore 20%. Handa Resources Limited holds two subsidiaries in Zambia, Zaco (99%) and Afrimin (80%) and holds assets previously held by Zamsort.)

(Arc also holds 75% in Alvis-Crest (Proprietary) Limited which holds two licenses in the Kalahari Copper Belt, known as Virgo covering >210km2, around 10km southeast the recently commissioned Khoemacau Copper in Botswana.)

• Yesterday afternoon, Arc Minerals reported that Zambia’s Ministry of Mines and Mineral Development has granted a ‘Large Scale Mining Licence’ (33404-HQ-LML) to its 30% owned Handa Resources (Anglo American 70%).
• The company also confirms that “the other two Large Scale Mining License Applications 33402-HQ-LML and 33403-HQ-LML now reflects as reinstated on the Zambian Mining Cadastre Portal”.
• Thanking the “officials at the Ministry of Mines and Mineral Development and the Mining Cadastre for their ongoing support”, Executive Chairman, Nick von Schirnding, described the resolution of “the outstanding licence matters … [as an] … excellent outcome”.
• He summarised the opportunity in Zambia as “a significant licence in one of the most prospective areas for copper, globally”.

Arras Minerals  (ARK CN) C$0.32, Mkt Cap C$28m – Initial drilling results from Elemes project, Kazakhstan

• Arras Minerals, copper explorer in Kazakhstan, reports assay results from the first three drillholes from Elemes, where it is targeting the Bereszki target.
• The Company reports it has intersected porphyry-style copper-gold mineralisation from surface.
• Results as follows:
  • EL24001: 261m at 0.39g/t Au and 0.24% Cu from 22m.
    • Including 48m at 0.77g/t Au and 0.25% Cu from 157m.
    • Drillhole ended in mineralisation
  • EL24002: 102m at 0.31g/t Au and 0.11% Cu from 2m
    • Including 34m at 0.32g/t Au and 0.13% Cu from surfacr
  • EL24003: 264m at 0.17g/t Au and 0.09% Cu from 41m
    • Including 30m at 0.25g/t Au, 0.16% Cu from 263m.
• Mineralisation hosted in argillic and phyllic altered diorites, with the team suggesting the holes have drilled the ‘large pyrite halo peripheral to the core of a large porphyry system.’
• Company also notes that at 50-100m depths, they begin to ‘intersect A-, B- and D-type veins, which are generally found to increase towards the center of porphyry deposit.’
• Yesterday’s results represent the first of seven target areas being tested at Bereszki across an 8.8km soil anomaly.
• Additional results expected through 1Q25 following the completion of the 4,000m diamond drilling progamme in December.

First Quantum (FM CN) C$19.5, Mkt Cap C$17bn – 2024 production results and 2025-2027 guidance

• Copper producer First Quantum produced 431kt Cu in 2024, above guidance of 400-420kt.
• Kansanshi saw increased production yoy to 171kt from 135kt 2023 whilst Trident, which holds the Sentinel operation, boosted production to 231kt from 214kt.
• Kansanshi improvement a result of higher feed grades.
• Sentinel production also benefiting from higher grades despite pit access issues from accumulated water.
• No copper produced from Cobre Panama vs 331kt in 2023 amid the ongoing shutdown.
• Gold production fell to 139koz vs 227koz, reflecting the shutdown of Cobre Panama.
• Nickel production down slightly to 24kt from 26kt in 2023.
• 2025-2027 guidance:
  • Copper: 380-440kt 2025, 390-450kt 2026 and 430-490kt 2027.
  • Copper AISC at $3.05-3.35/lb 2025, 2.95-3.25/lb 2026 and 2.85-3.15/lb 2027
  • Gold: 135-155koz 2025, 215-240koz 2026, 200-225koz 2027
  • Nickel: 15-25kt 2025, 30-40kt 2026, 30-40kt 2027
  • CAPEX: US$1,300-1450 2025, US$950-1,050m 2026 and US$800-900m 2027.
• Company expects a ‘conservative ramp-up profile for S3’ at Kansanshi, due to begin production 2H25.
• Lower production from Sentinel reflects lower-grade oxidized and transitional ore mining and increased waste stripping.
• Company investing US$115m in La Granja development for the EIA, drilling and other environmental expenditure.
• FQM is ‘working constructively with the Government of Panama on responsible stewardship and progress toward a resolution for Cobre Panam

Great Southern Copper (GSCU LN) 1.65p, Mkt Cap £8.8m – Progress of Cerro Negro Drilling

• Great Southern Copper reports the completion of the first 2 drillholes of its Phase 1 drilling campaign at its Cerro Negro copper/gold/silver target within its Especularita project located 170km from the port city of Coquimbo, and 130km from Antofagasta Minerals’ copper concentrate port at Los Villos in Chile.
• The first hole (CNG25-DD001) was completed at a depth of 103.5m and intersected “20 metres of intensely altered and mineralised rock between 27m and 47m depth, confirming Cu-Ag mineralisation continuity below the historical open pit” at Mostaza.  Samples have been sent for assay.
• Although assays are not yet available, Great Southern Copper explains that CNG25-DD001 “targeted the path of historical drillhole EDH-25, which recorded 25.33m of 0.53% Cu, including 6m of 1.05% Cu and 81g/t Ag, and 9m of 0.92% Cu and 73g/t Ag”.
• Photographs of drill core from hole DD001 included in today’s announcement show veinlets of the copper minerals chalcocite (Cu2_S) and bornite (Cu₅FeS₄) as well as potentially favourable alteration types and structures.
• The second hole (CNG25-DD002) has also been completed at a depth of 61.60m and the “core is being processed and evaluated for sampling” with the company saying that it “intersected the same alternation zone and mineralisation target as drillhole CNG25 DD001”.
• Hole 3 of the planned 500-1,000m programme of 5-10 holes “is now underway” apparently targeting deeper levels of mineralisation.
• CEO, Sam Garrett, explained that hole CNG25-DD001’s intersection of “20 meters of intensely altered and mineralised rock between 27 and 47 meters depth … aligns closely with historical drilling, indicating a west-dipping tabular body that remains open and untested at depth”.

Conclusion: We await assay results from the first holes of the Phase 1 drilling at the old Mostaza mine in Chile with initial inspection showing the intersection of copper mineralisation in the two holes completed to date.

KEFI Gold and Copper (KEFI LN) 0.5p, Mkt Cap £30m – New exploration license secured in Saudi Arabia

• GMCO (ARTAR/KEFI 85/15%) secured Umm Hijlan Exploration Licence, located directly south of the Hawiah license area in Saudi Arabia.
• The license hosts southern strike extension of the main Hawiah VMS system.
• The new licence consolidates a 210km2 strategic area for GMCO and offers the potential to add significant resources to the advanced Hawiah Copper Gold Zinc Silver Project.
• Historical drilling and trenching at Umm Hijlan have revealed high-grade gold mineralisation outcropping 5km south along strike from the Hawiah gossan.
• Hitorical results included high grade intersections within the oxide domain including 8m at 13.9g/t Au (trench), 7.3m at 11.1g/t Au from 14.7m and 5.6m at 18.8g/t from 18.9m (drilling).
• Additionally, a separate gold system related to an intrusive contact was identified and tracked over a discontinuous strike of 10km.
• The Mamilah gold system outcrops at several locations presenting as lenses of mineralised quartz veins with thickness of up to 20m and strike lengths of up to 200m.
• Historical drilling showed ~4m wide intersections at 6-12g/t within ~20m from surface.
• GMCO is planning to accelerate exploration programme to estimate MRE on the new property that can be incorporated in the Hawiah and Al Godeyer mine plan.

Conclusion: Saudi Arabia JV (GMCO) secured attractive exploration licenses located next to the Hawiah property with a view to test new area for potential extensions of Hawiah mineralisation as well other identified targets with a view to potentially incorporate new tonnage into the Hawiah and Al Godeyer mine plan.

*SP Angel act as Nomad and Broker to KEFI Gold and Copper

Metals Exploration (MTL LN) 5.9p, Mkt Cap £104m – Quarterly update following acquisition of Condor Gold

• Gold producer Metals Exploration reports results to 31^st December 2024.
• The Company reports FY24 free cash flow of US$96.7m, US$22.5m of which was generated in 4Q24.
• 4Q24 gold sales stood at 19.1koz at an average price of US$2,481/oz vs 21.9koz in 3Q24.
• 18.8koz produced over the quarter, processing 530kt at an average grade of 1.17g/t, recovering 94.5%.
• This compared to 521kt processed in 3Q24 at 1.51g/t Au for 22.5koz.
• The Company produced 84koz in Fy24, exceeding their forecasts of 82.5koz.
• 2024 AISC reported at US$1,135/oz, vs guidance of US$1,125-1,275/oz.
• FY2025 guided at:
  • 70-75koz Au
  • AISC of US$1,225-1,325/oz.
• Metals Exploration has now received approval to begin drilling at the Abra project, expected t begin this quarter
• Over the year, the Company acquired 100% of Condor Gold*, who held the La India Project in Nicaragua.
• Management notes that they are ‘rapidly advancing plans to build an experienced in-country team, re-estimate the current resource base, and commence the design of a gold resource extension and verification drill programme.’
• Cash held at year end was US$32m, including US$27.8m reserved to be applied to the maximum cash component of the Condor takeover.
• US$6.9m bridging loan due to be repaid 31^st January 2025.

*SP Angel acted as Broker to Condor Gold

Rio Tinto (RIO LN) – 5,016p, Mkt cap £62bn – CEO highlights strong progress on delivering organic growth in 2024

1. Final quarter and 2024 production reports from Rio Tinto show that it achieved its guidance across all commodity groups except bauxite which, with annual output of 58.7mt, exceeded the 53-56mt guidance.
2. CEO, Jakob Stausholm, noted progress in the ramp-up of underground operations at Oyu Tolgoi and the prospect of initial iron-ore production at Simandou and the Western Range project in the Pilbara as he highlighted “strong progress in delivering organic growth from our major projects”.
3. Commenting on the economic backdrop for its principal commodities, Rio Tinto says that the “global economy is showing resilience with inflation moderating and growth stabilising, although risks of geopolitical tensions and persistent labour shortages remain … [while] … China’s economic growth drivers continue to shift from the property sector to advanced manufacturing and new technologies”.
4. The company says that the “US economy has outperformed other developed economies and its outlook remains stable” while the Eurozone “outlook continues to be uncertain” and the “Chinese economy provided mixed signals during the quarter … [while continuing to face] … headwinds from an ongoing property market oversupply”.
5. Rio Tinto notes weakening commodity prices with an 8% decline in iron-ore prices over the quarter and quarterly declines of 4% in aluminium prices and of 11% in copper.
6. Iron ore production of 86.5mt during the quarter brought 2024 output to 328.0mt with shipments of 85.7mt bringing the annual total to 328.6mt within the guidance range of 323-338mt.  Guidance for 2025 is maintained in the range 323-338mt “subject to weather impacts”.
7. The Simfer iron-ore mine in Guinea is “on track to deliver first production at the mine gate in 2025, ramping up over 30 months to an annualised capacity of 60 million tonnes per year (27 million tonnes per year Rio Tinto share) … with first ore crushed on 1 January 2025”.
8. The higher-than-expected bauxite production “was driven by the implementation of the Safe Production System, delivering record annual production at Amrun and Gove, with the former currently operating above nameplate capacity”.
9. Bauxite production guidance for 2025 is in the range 57-59mt.
10. “Aluminium production of 3.3 million tonnes was 1% higher than 2023, following the ramp-up of Kitimat and completion of cell recovery efforts at Boyne in the prior year, together with increased ownership of Boyne and New Zealand Aluminium Smelter (NZAS). These were partially offset by the continued closure program at Arvida and a request to reduce energy usage at NZAS, resulting in lower output”.
11. Aluminium production guidance for 2025 is within the range 3.25-3.45mt.
12. Final quarter mined copper production of 202kt during the final quarter brought 2024 output to 697kt – a 13% increase on 2023 and within the 660-720kt guidance range.
13. The increased copper output reflects “the ramp up of Oyu Tolgoi underground and increased production from Escondida due to higher grades fed to the concentrator (0.99% versus 0.83%) … [offsetting] … geotechnical challenges at Kennecott as instabilities in the pit wall impacted the mining sequence from the second quarter”.
14. Rio Tinto continues to “await a decision from the U.S. Supreme Court” on the proposed land exchange to facilitate development of the Resolution Copper project in Arizona.
15. From 2025, Rio Tinto “will report copper production and guidance as one metric, in order to simplify reporting and align with peer practices” having previously reported mined and refined copper output guidance separately.
16. Commenting on progress with the underground operation at Oyu Tolgoi, Rio Tinto described the initial delivery of ore from underground using the conveyor system which is “able to transport ore to the surface from a depth of 1,300 metres” as well as continuing work on the conversion of the concentrator which is currently being commissioned and is “forecast to be progressively completed through to the second quarter of 2025”.
17. Rio Tinto also comments on the December 2024 agreement with Sumitomo for a joint venture “to deliver the Winu copper-gold project in Western Australia”.  Sumitomo “will pay $195 million upfront, and $204 million in deferred consideration” with Rio Tinto remaining the developer and operator of the 10mtpa project.  A pre feasibility study is “expected to be completed in 2025, along with the submission of an Environmental Review Document under the EPA Environmental Impact Assessment process”.
18. Rio Tinto also reports the first lithium production from the starter plant at its Rincon project in Argentina where “Full commissioning and plant ramp-up continues, with project completion expected in the first quarter of 2025”.
19. “The feasibility study for the full-scale operation … [at Rincon] … was completed during the quarter, with … [subsequent Board approval for] … an investment of $2.5 billion to expand Rincon’s capacity to 60,000 tonnes⁴ of battery grade lithium carbonate per year”.
20. Rio Tinto reports expenditure of US$935m (2023 – US$855m) on exploration where it holds “a strong portfolio of projects with activity in 17 countries across eight commodities in early exploration and studies stages”.
21. Most of the “exploration expenditure in the fourth quarter focused on copper in Angola, Chile, Colombia, Papua New Guinea, Peru, the US and Zambia, nickel in Finland, lithium in Canada, Rwanda, and Australia, potash in Canada, diamonds in Angola, heavy mineral sands (HMS) in South Africa and rutile-graphite in Malawi”.

Conclusion: Rio Tinto met or exceeded its 2024 production guidance across its commodity groups with the company emphasising the stability of its operations. The company notes the resilience of the US economy and comments on uncertainties in both the Eurozone and in China.

LSE Group Starmine awards for 2024 commodity forecasting:

No.1 in Precious Metals: SP Angel mining team awarded No 1. ranking for Precious Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474

Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

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