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U.S. copper frenzy grows as Rio Tinto plans $1.5 billion Utah mine expansion

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By Reuters
U.S. copper frenzy grows as Rio Tinto plans $1.5 billion Utah mine expansion
FILE PHOTO: The Rio Tinto logo is displayed on a visitor's helmet at a borates mine in Boron, California, U.S., November 15, 2019. REUTERS/Patrick T. Fallon   -   Copyright  PATRICK T. FALLON(Reuters)
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By Ernest Scheyder

(Reuters) – Rio Tinto Plc <RIO.L> <RIO.AX> said on Tuesday it would spend $1.5 billion to expand its Kennecott copper mine in Utah, part of a growing trend by miners to invest in strategic mineral projects across the United States.

The move more than doubles the mining industry’s recent investment in U.S. copper projects, as Tesla Inc <TSLA.O> and other automakers demand more of the red metal for electric vehicle motors and other components.

“We like copper. We like the U.S.,” Rio Chief Executive Jean-Sebastien Jacques said in an interview. “If we had not taken this decision, our position in the U.S. market would be shrinking.”

Rio said the investment will extend the life of the more-than 100-year-old open-pit mine near Salt Lake City from 2026 through 2032, with the potential to keep it operational thereafter. The expansion project, which Rio said will generate “attractive returns” without elaborating, is set to get underway next year.

Once seen as a laggard in the global mining industry, U.S. copper deposits have drawn more than $1.1 billion in recent investments from small and large miners alike before Rio’s Tuesday announcement.

U.S. President Donald Trump has moved to cut mining regulations since taking office in a bid to encourage domestic mining and also offset China’s control of key parts of the military weapons supply chain, efforts that have dovetailed with those in the U.S. Congress.

The Kennecott mine on privately-owned land produces nearly 20% of the U.S. copper production, as well as gold and silver. Rio operates one of three U.S. copper smelters at the site.

The Anglo-Australian company had telegraphed last year that it was on the hunt for fresh copper, though analysts had assumed a large acquisition rather than expansion of an existing asset, was likely.

Rio has faced recent challenges in other parts of its copper portfolio. Its Mongolian copper mine project hit a major setback last month when lawmakers there approved plans to revise the terms of an agreement underpinning the multibillion-dollar development.

In Arizona, Rio’s Resolution underground copper project with BHP Group <BHPB.L> has spent years waiting for U.S. approval, though the permit logjam appears to be clearing.

Rio also said on Tuesday it was working with U.S. government scientists to extract rhenium and tellurium – used in jet engines and military explosives – from Kennecott’s refiners and smelters.

Rivals Glencore Plc <GLEN.L> and Freeport-McMoRan Inc <FCX.N> also have U.S. mining projects under development.

(Reporting by Ernest Scheyder; Editing by Bill Berkrot)