MELBOURNE (Reuters) - Rio Tinto <RIO.L> <RIO.AX> has changed its exploration strategy to consider smaller ore deposits that have growth potential, as the likelihood of finding large, low cost mines dwindles, an executive said on Thursday.
Global mining giants like Rio Tinto and BHP Group <BHP.AX> <BLT.L> have long banked on finding large mineral deposits that can weather commodity price cycles because of economies of scale - so-called "tier one" deposits.
Copper is currently in hot demand for use in green technologies, from wind turbines to electric vehicles, but those reserves have proven tough to find so Rio Tinto has had to take a new approach, said Lynn Olssen, a General Manager at Rio Tinto's exploration department.
"Copper is our preference. A bit like BHP we'd love a tier one ... large and low low cost. If you could do it, could it be shallow please and near the coast, with some good infrastructure would be ideal," Olssen told a Melbourne mining conference.
"However in recent times, tier ones have become a lot harder to find ... So we have changed our philosophy a little," she told a mining conference.
Rio Tinto will now consider smaller resources that have the potential to grow if they have a moderate capital expenditure, are in jurisdictions with low political risk that don't have large wealth inequality, and can be developed in a reasonable timeframe, she said.
Her comments are in line with a speech by Rio Tinto Chief Executive Jean-Sébastien Jacques in London this week, when he said that majors may need to think more like nimble juniors.
"Instead of looking for the big bang, maximum ... development options, perhaps we should look to (staged) investments, starting with smaller mines, which can be built quickly and safely, with embedded optionality for growth," Jacques said.
Shorter building timeframes translate to quicker cashflows to shareholders, communities and governments, he added.
According to its half-year report, Rio Tinto spent $287 million on exploration and evaluation in the six months to end-June, up 24 percent on a year earlier.
The miner is actively drilling and exploring for 8 commodities across 17 countries.
"We have got more greenfields targets now than we have had in two decades," Olssen said.
(Reporting by Melanie Burton; editing by Richard Pullin)
