Rio Tinto makes 2030, 2050 emissions pledges

In the next five years, Rio’s “climate-related” spending will reach $1bn (£770m), split between capital and operational expenditure. This figure is 14 per cent of 2020’s capex forecast. The miner will also aim to cut its absolute carbon emissions by 15 per cent by 2030.

Rio has not followed BHP’s lead and included scope 3 emissions in its goals, despite investor pressure. These are whole supply chain emissions, so would include the carbon output from Chinese steelmakers and the power plants that provide them with electricity. The company is already at 76 per cent renewable energy for its managed operations, although it is planning a new coal power plant at the Oyu Tolgoi mine in Mongolia. 

Asked if there would be major changes to the portfolio to get to the 2030 targets, chief executive Jean-Sebastien Jacques said Rio would still be in the iron ore, aluminium and copper businesses, and said he was interested in nickel and lithium, which the company already had exposure to through the Jadar project in Serbia. 

Iron ore drove Rio’s 2019 performance: it grew to 56 per cent of the company’s revenue from 46 per cent in 2018, and provided almost three-quarters of overall cash profits. All the other major divisions saw revenue and cash profits fall year on year. 

Looking ahead, the company has already cut its 2020 iron ore guidance because of a cyclone in Western Australia, from 330-343 million tonnes (mt) to 324-334mt. Rio said it was pushing its mines harder to achieve this production level, with “record total material movement” in 2019 and hauling distances expected to increase in 2020.

The coronavirus impact is not yet clear, but chief commercial officer Simon Trott said the logistics challenges caused by the outbreak (a lack of truck drivers, for example) had not yet affected demand, and forecast greater stimulus to come from the Chinese government in reaction. 

Bloomberg consensus forecasts put 2020 cash profits at $18.7bn, down 12 per cent on 2019.