Mining giant Rio Tinto is looking at a sharp jump in earnings for 2010 after a record year for its huge iron ore business which will allow it to offset a slight weakening in quarterly ore prices for the three months to December.
Rio earned $US7.06 billion before abnormals in 2009 and it is well on the way to beating that after earning $US5.84 billion in the six months to June.
A repeat of that performance would push earnings to $US11 billion ore more, still short of the record $US14.8 billion earned in 2008 at the height of the last boom.
The shares rose 86c to end at $86.80 after the report was released at 3 pm Eastern Summer Time, an hour before trading ended.
Rio said in its December quarter and 2010 production report that it set new quarterly and annual iron ore production records after running its operations at full capacity in 2010.
But copper, coal and uranium output were weaker.
The company’s share of iron ore output rose 6% on the year to 50.1 million tonnes (mt) in the fourth quarter from 47.2 mt in 2009.
The company’s global iron ore operations achieved a quarterly production record of 65 mt for the three months to December 30, with 50 mt attributable to Rio.
The global operations produced a record 239 mt in calendar 2010, with 185 mt attributable to the miner.
The Pilbara operations produced above its expected capacity and total production for the year was 224 mt (on a 100% basis).
Production of hard coking coal fell to 2.279 mt from 2.434 mt the previous quarter, as rainfall in Queensland’s Bowen Basin hit output.
Australian thermal coal production rose 3% on the year to 5.2 mt from 5 mt, while US thermal coal slid 46% to 9.2 mt from 17.1 mt with the company selling off mines and assets in a series of transactions.
Australian hard coking coal production was up 8% on the fourth quarter of 2009 and rose 20% on full year 2009, following increased investment at the Queensland operations.
Australian thermal coal production was down 9% overall for the year, mainly due to wet weather in the Hunter Valley mines of associate Coal and Allied.
The company said the force majeure declaration at the four Queensland coal mines remains in place.
All the Queensland coal mines are operational (Hail Creek, Kestrel, Blair Athol and Clermont) but are still constrained in some way by weather impacts,
Including the impact on third party infrastructure, Rio Tinto is currently unable to provide an estimate of the full impact of this adverse weather or the duration of the force majeure declaration.
Mined copper production fell 9% on the year to 185,200 tonnes from 203,300 tonnes.
Aluminium production was flat on year at 9.62 million tonnes against 9.57 million tonnes in the fourth quarter of 2009, while uranium production dropped 3%% to 3.3 million pounds from 3.4 million pounds.
CEO Tom Albanese said, “Running our operations at full capacity was a priority for Rio Tinto in 2010, in an environment of strong prices for most of our commodities. Our success is clearly demonstrated in iron ore where we set new quarterly and annual production records.
"During the quarter we approved a further $5.5 billion in value-adding growth projects, including the expansion of our Pilbara iron ore operations to 283 million tonnes a year and the first phase of an aluminium smelting pilot plant in Quebec using our new AP60 technology.”
On December 8, Rio Tinto signed a new agreement with Ivanhoe Mines under which Rio Tinto will assume direct management of the Oyu Tolgoi copper-gold project in Mongolia.
Rio Tinto approved major capital projects totalling $5.5 billion during the fourth quarter, bringing the full year total of project approvals to $10.8 billion.
