Rio Tinto lifts iron ore production



Source: THE SYDNEY MORNING HERALD

Miner Rio Tinto has revealed significant growth in iron ore production for the March quarter thanks to productivity improvements, fewer weather disruptions and the ramp up of the new Silvergrass mine, while copper production rebounded after a labour strike hit the Escondida mine last year.

Pilbara iron ore production rose 8 per cent to 83.1 million tonnes for the March quarter compared to the same period in 2017.  Iron ore shipments also rose, by 5 per cent, to 80.3 million tonnes.

But the miner said alumininum production was down 5 per cent compared to the first quarter of 2017, to 0.8 million tonnes, attributing the fall mainly to an “ongoing lock-out” at a Canadian smelter, and a power incident that affected the Dunkerque smelter in France.

Rio said its aluminium guidance for 2017, of 3.5-3.7 million tonnes, would be adjusted following the recently announced sale of aluminium smelters, adding that “adjustments” may also be needed as a result of the new US sanctions on Russia.

Aluminium is a significant earner for Rio, contributing $US3.42 billion to its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) in 2017. By way of comparison, iron ore contributed $US11.52 billion to Rio’s EBITDA in 2017.

In its “first quarter operations review” Rio said it was on track to meet its 2018 guidance for iron ore shipments, of 330-340 million tonnes.

Rio also gave an update on its automated Pilbara train system known as AutoHaul, saying it was on schedule for completion by the end of 2018.

Rio said that at the end of the quarter about 65 per cent of trains were operating “in autonomous mode with a driver on board for supervision and more than three million kilometres now completed in this mode of operation”.

Rio reported higher bauxite production for the quarter, up 12 per cent to 12,653 tonnes, and a hefty 65 per cent jump in mined copper production, to 139,300 tonnes as production ramped up at the Escondida mine in Chile, after a lengthy strike hit production at the world’s biggest copper mine in the first half of 2017.

Chief executive officer Jean-Sebastien Jacques said Rio had recorded a “solid operational performance across most commodities” for the March quarter.

“Our world-class Pilbara iron ore assets continue to demonstrate flexibility and the benefits of increased productivity, and production at our bauxite and copper assets was also higher.

“We announced $US5 billion of divestments in the quarter, highlighting our ongoing drive to strengthen the portfolio and raise return on assets,” he said.

In a busy March quarter Rio announced deals for the sale of its Aluminium Dunkerque smelter for $US500 million, as well as the ISAL aluminium smelter in Iceland for $US345 million.

Rio also confirmed its long anticipated exit from coal in the quarter, as it announced deals for the sale of the Kestrel and Hail Creek mines in Queensland, and the Valeria and Winchester South development projects for a total of $US4.15 billion.

The miner said it was on track to meet its share of mined copper production for the year, of between 510,000 and 610,000 tonnes.

Metals and mining analyst Peter O’Connor, from Shaw and Partners, said Rio’s production numbers “look to be in line” with expectations.

Mr O’Connor said Rio’s copper production was “sharply higher”, adding that this had been expected for a long time.

“The grade turn around at Escondida is finally delivering as is the higher throughput rates from the recent expansion. This translates to much better production numbers for RIO/BHP (partners at Escondida). Whilst the market might not have got the number perfectly right the sharp uptrend was expected and delivered,” he said.

Rio had reconfirmed its guidance for all businesses except minerals sands, he said.

Morningstar resources analyst Mathew Hodge said of Rio’s quarterly: “It’s largely as expected, and they’re basically tracking in line with their guidance.”

A highlight from the quarter was Rio’s asset sales. “It’s probably not a bad time to be selling assets,” Mr Hodge said.

Source: THE SYDNEY MORNING HERALD