The Rio Tinto Limited (ASX: RIO) share price will be one to watch on Thursday. This follows the release of…
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The 力拓集团 (ASX: RIO) share price will be one to watch on Thursday.
This follows the release of an announcement after the market close.
Why is the Rio Tinto share price on watch?
Investors may want to keep an eye on the Rio Tinto share price tomorrow following the release of an update on its Richards Bay Minerals (RBM) operation in South Africa.
South Africa has been battling riots this month following the jailing of former president Jacob Zuma for failing to appear at a corruption inquiry.
According to today’s update, the RBM operation has been forced to shut one of its four furnaces due to the depletion of available feedstock at the plant. The company advised that this is the result of mining operations being halted following an escalation in the security situation at the operations which significantly hampered the mine’s ability to operate safely.
The four furnaces at RBM are dependent on a stockpile of feedstock, which is being steadily depleted. However, the decision to shut one furnace will reduce the call on the stockpile and limit the long-term impacts of a shutdown on the RBM’s furnaces.
Nevertheless, management notes that it declared Force Majeure on its customer contracts at RBM on 30 June 2021.
Rio Tinto’s Chief Executive of Minerals, Sinead Kaufman, said: “Shutting a furnace has a major impact on the business and broader community and it not a decision we have taken lightly.”
“However, we will not put production ahead of the safety of our people and there are still fundamental criteria that must be met before we can resume operations in a sustainable manner.”
“We continue to work with national and provincial governments as well as community structures to find a lasting solution to the current situation so that operations can resume as soon as it is possible to safely do so,” she added.
The release explains that RBM will regularly reassess the situation to make further decisions on any potential restart or the shutting of the other furnaces. This will depend on when the safety and security position improves.
Until then, all operations at RBM remain halted until further notice.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.