Rio Tinto has slightly raised its production guidance for iron ore after posting a 39% jump in first-quarter output, thanks mostly to Chinese demand and recovery in other markets in Asia.
Rio Tinto said yesterday it expected to produce about 234 million tonnes of the steel-making commodity this year, including outside interests in jointly owned mines, a slight upgrade from its previous guidance of 230 million tonnes.
That’s 7.8% up on the 217 million tonnes produced in 2009.
Chief executive Tom Albanese said: “In the first quarter, most of our operations continued to run at capacity.
"Chinese demand grew strongly and we saw some recovery in OECD markets, but we are still cautious about short term volatility.
"The long term outlook remains very strong and we are now ramping up our growth projects with sustained investment in our iron ore business and the start of development of Oyu Tolgoi.”
Rio Tinto’s said first quarter global iron ore production was up 39% compared with the first quarter of 2009, when heavy rains disrupted operations.
Pilbara iron ore production was 53 million tonnes (41 million tonnes on an attributable basis), up 48% cent on the first quarter of 2009.
First quarter sales were lower than those in the 4th quarter of 61 million tonnes. Production in the Pilbara in the 4th quarter was 56 million tonnes.
Sales volumes from the Pilbara region of Western Australia were sustained at high levels of 53 million tonnes during the quarter (100 per cent basis), a decline of 6% on the record fourth quarter and 34% higher than the corresponding quarter of 2009.
The shortfall was caused by the restricted availability of "car dumpers" on the Pilbara.
"Shipments to all major markets, including the largest single market, China, were maintained at or close to capacity levels and totalled over 217 million tonnes over the course of the past twelve months," Rio said.
"The Pilbara system continued to operate at or close to its nameplate capacity during the quarter with production for the 12 months to 31 March 2010 totalling 219 million tonnes.
"First quarter production was 48 per cent higher than the corresponding quarter of 2009, which was impacted by a two week production shutdown and a separate two week suspension of the mainline rail system following heavy rains.
"During the quarter, Rio Tinto started producing iron ore from the US$901 million (Rio Tinto share US$478 million) Mesa A / Warramboo mine. The mine will have an initial production of 20 million tonnes per annum, increasing to 25 million tonnes by 2011."
Rio said that during the first quarter it completed $3.5 billion of previously announced divestments comprising Alcan Packaging Food Americas, Alcan Packaging global Pharmaceuticals, global Tobacco, Food Europe and Food Asia divisions and two undeveloped properties sold by Coal & Allied.
"Since February 2008, Rio Tinto has completed asset sales of $10.3 billion. On 31 March 2010 the Company announced the receipt of a binding offer for the Alcan Beauty Packaging business.
"During the quarter, the Group reduced net debt by approximately $4.5 billion, including the repayment of $5 billion of the Alcan facility due in 2012."
Among other points from the first quarter report, Rio said:
Mined copper production was down 16% on the first quarter of 2009 primarily due to lower grades at Kennecott Utah Copper and Grasberg.
Mined gold and molybdenum production were 12% and 58% higher than the first quarter of 2009, mainly attributable to higher grades at Kennecott Utah Copper.
Bauxite production increased 18% on the first quarter of 2009 in line with improving market demand. Production levels were maintained for alumina and aluminium.
Australian hard coking coal production was up 35% on the first quarter of 2009. Australian thermal coal production was down 8% cent on the same period.
Uranium production was down 20% on the first quarter of 2009 due to lower grades at ERA and Rössing.
Rio said the development phase of the Oyu Tolgoi copper-gold project will now commence following satisfaction of all conditions precedent to the Investment Agreement with the Government of Mongolia.
During the quarter, Rio Tinto increased its ownership in Ivanhoe to 22.4%.
And Rio said the construction of the Kennecott Utah Copper Molybdenum Autoclave Process (MAP) facility is to restart, with the investment of $IS340 million in phases one and two of the project.
"First production from phase 1 is anticipated in the fourth quarter of 2012 and full capacity of 30 million pounds per annum is scheduled for the fourth quarter of 2013.
"The phase 2 expansion to 60 million pounds per annum is anticipated to be completed in the first quarter of 2015."
