(Alliance News) - Rio Tinto on Wednesday set out plans to get its Oyu Tolgoi copper and gold mine in Mongolia to sustainable production by October 2022, spending USD6.75 billion to do so.
Rio said the development of the underground project at Oyu Tolgoi, which has suffered a series of setbacks and delays, will unlock the most valuable part of the mine, which by 2030 is expected to be the fourth largest copper mine in the world. Oyu Tolgoi is expected to produce 480,000 tonnes of copper per year on average between 2028 and 2036 from both the open pit and underground, employing a workforce of over 12,000 people.
Rio said it still needs to work with 51%-owned partner Turquoise Hill Resources and the Mongolian government on outstanding government approvals, funding and a power solution.
"We now have a pathway to bring the underground project into production, which will unlock the most valuable part of Oyu Tolgoi," said Arnaud Soirat, chief executive of Copper & Diamonds at Rio Tinto.
Rio shares were up 0.1% early Wednesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.6% at 6,549.84
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Hang Seng: up 0.9% at 26,434.54
Nikkei 225: closed up 0.3% at 26,757.40
DJIA: closed up 337.76 points, 1.1%, at 30,199.31
S&P 500: closed up 1.3% at 3,694.62
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GBP: up at USD1.3483 (USD1.3401)
EUR: up at USD1.2165 (USD1.2151)
Gold: up at USD1,855.19 per ounce (USD1,847.70)
Oil (Brent): down at USD50.52 a barrel (USD50.63)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
0930 GMT UK flash purchasing managers' index
0930 GMT UK house price index
0930 CET Germany flash PMI
1000 CET Germany Ifo economic forecast Winter report
1000 CET EU flash PMI
1100 CET EU foreign trade
1100 CET EU construction output
0830 EST US advance monthly sales for retail & food services
0945 EST US flash manufacturing and services PMI
1000 EST US manufacturing & trade: inventories & sales
1400 EST US Federal Reserve interest rate decision
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The UK annual inflation rate softened sharply in November amid virus restrictions, figures from the Office for National Statistics showed. Year-on-year, consumer prices rose 0.3% in November versus October's inflation rate of 0.7%. Consensus, according to FXStreet, had expected inflation to ease more modestly to 0.6%. Month-on-month, prices fell 0.1% in November after stagnation in October. "With significant restrictions in place across the UK, inflation slowed, predominantly due to clothing and food prices," said Jonathan Athow, deputy national statistician for Economic Statistics at the ONS. Clothing prices fell 3.7% annually after a 0.2% rise in October. Food prices fell 0.6% in November after 0.5% growth the month before. All non-essential shops in England were closed in November as the country entered a second national lockdown, with pubs, restaurants and bars also shuttered.
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The UK's highest court will rule on a legal challenge over the government's decision to give the go-ahead for a third runway at Heathrow Airport. A panel of five Supreme Court justices heard the challenge, brought by Heathrow Airport Ltd, at a two-day hearing in October. The judges are due to deliver their ruling on the case on Wednesday morning. Lawyers for Heathrow Airport told the court in October that the firm, which owns and operates the London airport, still wishes to go ahead with the expansion project. But they said that construction could not be completed until 2030 at the earliest, even if work begins in the near future.
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Japan's private sector downturn continued in the last month of 2020, IHS Markit survey data showed. The au Jibun Bank flash Japan composite purchasing managers' index print for December was 48.0 points, slightly less than the final November reading of 48.1 and still below the neutral 50.0 mark and into contraction territory. The flash manufacturing PMI, a measure of manufacturing sector health, increased to 49.7 points in December from 49.0 in November, getting closer to the neutral mark. The flash services business activity index, meanwhile, dropped further to 47.2 in December from November's 47.8 final reading, indicating a worsening decline in service sector output.
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Senior diplomats from Iran and major powers are meeting online on Wednesday to discuss the state of their nuclear deal that is eroding despite conciliatory signals from US President-elect Joe Biden. The consultations are meant to prepare upcoming talks among foreign ministers from Iran, Britain, France, Germany, Russia and China, according to diplomats. Iran has far more enriched uranium than allowed under the agreement that was reached in 2015, and has plans to install advanced equipment that could speed up this process, the International Atomic Energy Agency in Vienna said in two recent reports. The nuclear deal is meant to prevent the Islamic Republic from amassing uranium that could be used for nuclear weapons. In return, major powers promised to end Iran's economic isolation by lifting sanctions. US President Donald Trump pulled out of the pact and revived US sanctions in 2018. One year later, Iran started abandoning key provisions of the deal. Iran's pragmatic President Hassan Rowhani and his future US counterpart Biden have both said they are willing to return to the agreement.
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BROKER RATING CHANGES
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BARCLAYS INITIATES KEYWORDS STUDIOS WITH 'OVERWEIGHT' - TARGET 2950 PENCE
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BERENBERG CUTS CAPITAL & REGIONAL TO 'SELL' ('HOLD') - TARGET 10 (50) PENCE
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COMPANIES - FTSE 100
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Distribution firm Bunzl said it expects a "strong performance" for 2020, with continued growth in Covid-19 related orders during the fourth quarter of the year. Revenue for the year is expected to increase 8%, or 9% at constant currency. Organic revenue growth continues to reflect diverging trends between the strength of Covid-19 related product sales and declines in other products, Bunzl said. The firm's operating margin is expected to be higher than the prior year. Looking to the year ahead, Bunzl said it expects revenue in 2021 to be lower than the current year, with "minimal benefit" from larger Covid-19 related orders which have strongly supported the performance in 2020. Bunzl added that it has recently completed the purchase of Snelling, a Canadian business focused on the sale of cleaning and hygiene products and industrial and foodservice packaging.
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Moody's Investor Services late Tuesday lowered its outlook on AstraZeneca to negative following the drugmaker's hefty deal to acquire Alexion Pharmaceuticals. Moody's affirmed AstraZeneca's A3 senior unsecured ratings and P-2 short-term commercial paper rating. However, the ratings agency said the outlook for AstraZeneca has been changed to negative from stable following the Anglo-Swedish drugmaker's deal to acquire Alexion Pharmaceuticals. Over the weekend, AstraZeneca said it was buying US biotech firm Alexion for USD39 billion to boost its work on immunology. Moody's said the rating action incorporates governance considerations such as Moody's expectation that the acquisition of Alexion and the higher ensuing leverage would lead to continued competition between AstraZeneca's capital allocation priorities, including deleveraging through debt reduction and its ambition to increase the dividend over time. The agency said these actions creates "some uncertainty" around the firm's deleveraging path.
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COMPANIES - FTSE 250
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Electricals and mobile phone retailer Dixons Carphone reported a swing to interim profit as online sales surged. Revenue for the half-year to October 31 rose to GBP4.86 billion from GBP4.71 billion a year ago, with Dixons turning to a pretax profit of GBP45 million from a GBP86 million loss. "We've achieved this performance by doing what we said we'd do. We're winning online, and have triple-digit growth and rapid market share gains to show for it," said Chief Executive Alex Baldock. For UK & Ireland Electricals, revenue was up 15%, or 16% like-for-like, and online sales more than doubled, offsetting a loss of sales from enforced store closures and in Dixons Travel. Trading since the period end has continued strongly, the firm said. In UK & Ireland Electricals, like-for-like growth was 11% in the six weeks to December 12 despite stores in England, Wales, Scotland and Northern Ireland having been closed for substantial periods. The immediate outlook is "less certain", Dixons said, as it noted the pandemic and possible Brexit disruption. The company added that it continues to discuss the possibility of listing a minority stake of its Nordics business in 2021.
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Wednesday's Shareholder Meetings
Oilex Ltd - AGM
Orosur Mining Inc - AGM
EQTEC PLC - AGM
Ncondezi Energy Ltd - AGM
Telecom Plus PLC - EGM re new rumuneration policy, bonus plan
InnovaDerma PLC - GM and adjourned AGM
United Carpets Group PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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