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(Alliance News) - Rio Tinto PLC on Wednesday said it has signed Australia's biggest renewable power deal in order to supply its Gladstone operations in Queensland.
The Anglo-Australian miner said it will buy the majority of electricity from Windlab's planned 1.4 gigawatt Bungaban project, or 80% of all power generated from the project over the next 25 years.
The deal will make Rio Tinto the biggest industrial buyer of renewable power in Australia, it said.
Once approved, construction of the Bungaban project is expected to start in late 2025 and is forecast to produce electricity by 2029, employ up to 600 people during construction and support up to 30 permanent jobs when operating.
This comes after Rio Tinto last month announced that it will develop Australia's "largest" solar power project, after agreeing to buy all electricity from the 1.1 GW Upper Calliope solar farm to provide renewable power for its Gladstone operations.
"The agreement will bring more renewable power into one of Australia's most important industrial hubs and marks another step towards Rio Tinto's climate goal of halving its global Scope 1 & 2 carbon emissions this decade," the miner said.
It said under a new power purchase agreement with European Energy Australia, it will buy all power generated from the solar farm for 25 years. European Energy will build and operate the plant at a site about 50 kilometres south-west of Gladstone, pending approvals for development and grid connection.
Once complete, the Upper Calliope solar farm has the potential to cut Rio Tinto's operating carbon emissions by 1.8 million tonnes per year.
According to Rio Tinto, once developed, the combined 2.2GW of renewable PPAs with Windlab and European Energy have the potential to lower carbon emissions by about 5 million tonnes per year and could generate the equivalent of 10% of Queensland's current power demand.
Chief Executive Jakob Stausholm said: "This agreement with Windlab builds on our momentum in our work to repower our Gladstone operations and provide a sustainable future for heavy industry in Central Queensland.
"The task remains challenging, but we have a pathway to provide the competitive, firmed power our Gladstone plants need and we are continuing to work hard with all stakeholders, including the Queensland and Australian governments, on getting there."
Rio Tinto also reported on Wednesday a decline in yearly revenue and profit and cautioned on higher costs at the Pilbara iron ore operation in 2024.
Consolidated sales revenue in 2023 was 2.7% lower at USD54.04 billion from USD55.55 billion in 2022. Pretax profit declined 26% to USD13.79 billion from USD18.66 billion.
"We are making clear progress as we shape Rio Tinto into a stronger and even more reliable company. By focusing on our four objectives, we are building a portfolio that is fit for the future - including our Oyu Tolgoi underground copper mine in Mongolia and the Simandou iron ore project in Guinea," Stausholm said.
"In 2023, we lifted our overall copper equivalent production by over 3% and delivered resilient financial results."
Rio Tinto declared a 258.00 US cents per share final dividend, a rise of 15% from 225.00 cents. Its total dividend for the year, however, was 12% lower at 435.00 cents per share from 492.00 cents.
"We will continue paying attractive dividends and investing in the long-term strength of our business as we grow in the materials needed for a decarbonising world," the CEO added.
Looking to 2024, Rio Tinto is guiding for Pilbara cash costs per wet metric tonne between USD21.75-23.50, up from USD21.5 in 2023.
"2024 guidance for Pilbara unit cash costs reflects the increased work effort in the mines and persistent labour and parts inflation in Western Australia," Rio said.
However, copper costs will ebb.
"Our Copper C1 unit costs are expected to decrease in 2024, primarily driven by higher volumes at Oyu Tolgoi as the underground continues to ramp up and at Kennecott, where refined copper volumes are expected to increase following the planned smelter rebuild in 2023," it added.
"We remain focused on cost control, in particular maintaining discipline on fixed costs, which are expected to be broadly flat in 2024. While inflation has eased, we continued to see lag effects in its impact on our third party costs, such as contractor rates, consumables and some raw materials; we expect this to stabilise in 2024."
Shares in Rio Tinto were down 1.1% at 5,173.00 pence each in London on Wednesday morning.
By Sabrina Penty, Alliance News reporter
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