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Rio Tinto share price on watch after RBM and Kennecott updates

The Rio Tinto Limited (ASX: RIO) share price will be on watch this morning following the release of two announcements to the market.

What did Rio Tinto announce?

The first announcement reveals that Rio Tinto will curtail operations at Richards Bay Minerals (RBM) in South Africa. This is to ensure the safety and security of its employees due to an escalation in violence in the communities surrounding the operations.

Rio Tinto’s RBM employees have experienced an escalation in criminal activity towards them recently. This led to one employee being shot and seriously injured in the last few days.

All mining operations at RBM have now been halted and the smelters are operating at a reduced level. This means that just a small number of employees are now on site.

As a result of this disruption, Rio Tinto’s titanium dioxide slag production will be at the bottom end of its 2019 guidance range of 1.2 million to 1.4 million tonnes.

In addition to this, the construction of the Zulti South project has also been temporarily paused.

The company is working with authorities with the aim of returning RBM to normal operations in the future.

Kennecott copper update.

In better news, Rio Tinto has approved a $1.5 billion investment to continue production at its Kennecott copper operation in the United States. This investment will be made over the next six years and will extend operations at Kennecott to 2032.

This additional investment will commence in 2020 and is included in the group capital expenditure guidance of $7 billion in 2020 and $6.5 billion in both 2021 and 2022 as development capital.

Rio Tinto’s chief executive, J-S Jacques, said “This is an attractive, high value and low risk investment that will ensure Kennecott produces copper and other critical materials to at least 2032. The outlook for copper is attractive, with strong growth in demand driven by its use in electric vehicles and renewable power technologies, and declining grades and closures at existing mines impacting supply.”

“Kennecott is uniquely positioned to meet strong demand in the United States and delivers almost 20 per cent of the country’s copper production. North American manufacturers have relied on high quality products from Kennecott for the past century and this investment means it will continue to be a source of essential materials into the next decade,” Mr Jacques added.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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