Despite firing 16,000 workers – one quarter of the company’s workforce – Rio Tinto’s profits continues to plunge – 65% in the first half of this year. The world’s most debt-saddled mining company cites depressed metal prices for the sharp drop.
To make matters worse, many analysts are beginning to see behind the rosy facade. Barry Sargeant, MineWeb’s “leading mining and metals’ market guru” says that Rio Tinto is using “spin” in an “enormous effort to slap veneer over wrecked bodywork from overstaying its borrowed time in the fast lane.”
According to global mining expert, Roger Moody, “despite a great show of recently getting back on its feet, Rio’s rights issue actually reduced value to its shareholders rather than increasing it.”
Rio Tinto recently issued roughly $15 billion in new shares in an effort to pay off nearly $40 billion in debt.
Rio Tinto is actively exploring throughout the upper Great Lakes region. Despite company projections that it would open by 2008, Rio Tinto’s design of the metallic sulfide Eagle Mine, in Michigan, has been accused of “incompetence” by mining expert, Jack Parker, while a rock mechanics expert commissioned by the State of Michigan, Dr. David Sainsbury, expressed concerns that conclusions in Rio’s application “are not considered to be defensible” and “do not reflect industry best practice.”
Additionally, Dr. Sainsbury told a colleague that the company’s mine plan was “technically antiquated sloppy and equivalent to high school level work.”
The company has yet to obtain permits through the US Environmental Protection Agency (EPA) and, legally, must amend its current mining permit to include drastic transportation and electric changes. In addition, a recent administrative law recommendation suggests that the company will have to seriously modify its mining plan in order to avoid desecrating a sacred site of local Anishinaabe tribes, Eagle Rock.
The project continues to face intense public scrutiny.
Permits and public support be damned, the company insists it is forging ahead. Last week, Rio Tinto told Michigan Radio that it has plans to clear the mine site to prepare for construction.
LSMN
Eve Divine
doncorvette
