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VANCOUVER — There’s likely not an explorer with a bigger technical team or budget than Rio Tinto’s (NYSE: RIO; LON: RIO) Stephen McIntosh, who serves as the mega miner’s global head of exploration and has been with the company for over 28 years.
McIntosh took to the podium at the Association for Mineral Exploration BC’s (AMEBC) annual Roundup conference to address the company’s view on discovery success and the current downturn in the commodity cycle.
Even a company with the financial swagger of Rio — which maintains a market capitalization of roughly US$99.5 billion at the time of writing — hasn’t been immune to the cutbacks in exploration spending.
The company went from investing around US$2 billion in project development and greenfield programs in 2012 to around US$750 million in 2014. McIntosh was quick to underline, however, just how important maintaining a robust project pipeline is to the large-cap miner, and pointed out that “exploration is in this company’s DNA.”
Rio Tinto’s exploration arm employs a team of roughly 450 people, who handle the company’s greenfield and brownfield programs and also deal with business intelligence, big data analysis, and commodity strategies.
The company continues to actively drill its iron ore assets in the Pilbara region of Western Australia, while in the U.S. sampling and drilling was completed across copper projects in Utah, Arizona and Montana. In South America, field reconnaissance, geophysical surveying and drilling occurred across copper projects in Chile and Peru, and Rio remains focused on uncovering new nickel sulphide discoveries in Canada.
McIntosh points out that a lot of the budget cuts have come from “phasing,” wherein Rio delays project development since it isn’t under as much pressure to fast-track new production sources during downturns. He adds that much of the company’s “centrally-funded” exploration programs have been steady through the process.
“One of the questions I’m often asked is: ‘Why explore?’ If you look at the resource statements we have deposits in place that tend to go out decades ahead of current operations. I think what people often miss is the somewhat insidious nature of compounding growth rates,” McIntosh comments.
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