Operational Challenges at Kennecott and Regulatory Hurdles Cloud Rio Tinto’s Growth Path

Consistent Operational Performance

Rio Tinto delivered a solid fourth quarter in 2024, maintaining its commitment to operational excellence and profitable growth. The company reported a 1% increase in production and a 3% rise in sales volumes on a copper equivalent basis for the full year. This steady performance was underpinned by the ongoing implementation of the Safe Production System, which contributed to record annual outputs, particularly in bauxite at the Amrun and Gove operations in Australia.

Major Project Milestones

Significant progress was made on several of Rio Tinto's flagship projects. The Oyu Tolgoi underground copper mine in Mongolia continued its successful ramp-up, with first ore transported to the surface via conveyor in October 2024 and production on track to reach 500,000 tonnes of copper per year by 2028. Meanwhile, the Simandou iron ore project in Guinea is advancing steadily, with first mine gate production expected in 2025 and infrastructure milestones, including rail and port construction, being met despite challenging weather conditions.

In Argentina, the Rincon lithium project achieved a key milestone with first lithium production from its starter plant in November 2024. The company’s board approved a $2.5 billion expansion to increase annual battery-grade lithium carbonate capacity to 60,000 tonnes, positioning Rio Tinto as a growing player in the battery materials sector essential to the global energy transition.

Strategic Acquisitions and Partnerships

Rio Tinto also advanced its strategic portfolio through acquisitions and partnerships. The company signed a term sheet with Sumitomo Metal Mining to form a joint venture for the Winu copper-gold project in Western Australia, with Sumitomo committing upfront and milestone-based payments totaling nearly $400 million. Additionally, Rio Tinto is progressing the acquisition of Arcadium Lithium plc, which will enhance its lithium portfolio and global leadership in energy transition commodities, pending final regulatory approvals expected by mid-2025.

Operational Highlights and Market Context

Despite some operational challenges such as geotechnical issues at Kennecott and weather impacts in the Pilbara, Rio Tinto achieved record bauxite production, exceeding guidance by 7%. Aluminium production rose 1%, supported by ramp-ups at Kitimat and increased ownership of key smelters, although energy constraints at New Zealand Aluminium Smelter delayed full output recovery until mid-2025.

Market conditions showed mixed signals: iron ore prices softened slightly but remained supported by steady Chinese steel production, while copper prices were stable despite tariff risks and a strong US dollar. Lithium demand continues to grow robustly, driven by electric vehicle sales, with supply tightening expected in 2025 due to production cuts and project delays globally.

Sustainability and Safety Focus

Rio Tinto reported improvements in safety metrics, with a reduced all injury frequency rate in Q4. The company continues to embed cultural change initiatives and advance decarbonisation projects, including partnerships to develop low-carbon aluminium production technologies and renewable energy integration at key sites.

Looking ahead, Rio Tinto’s 2025 production guidance remains unchanged, with ongoing focus on project execution, regulatory approvals, and market dynamics shaping the outlook for its diversified commodity portfolio.