Investors were strangely neutral about the solid rise in iron ore production and sales from Rio Tinto (RIO) in the three months to March.
The shares were up around 1% at the day’s highs before they came back in the afternoon as the wider market sold off its day’s peaks as well.
The shares ended at $63.35, up 9c, but more than 70c under the intraday high of $64.03.
Rio’s report will be followed later today by similar statements from BHP Billiton (BHP) and Fortescue Metals (FMG) – meaning we will have a good idea of how our most important export sector – iron ore performed in the three months to March.
The company told the ASX that it produced 66.4 million tonnes of iron ore from its global operations in the March quarter.
That was up 16% on the first quarter of 2013, but down on the final quarter of last year, thanks to the now usual interruptions (for the first quarter) from cyclonic activity and heavy rains, especially in late January into February.
That impacted production at and shipments from the company’s Pilbara mines, its core business.
They ended up producing just 63.4 million tonnes, thanks to the adverse weather. But sales were just over 64 million tonnes.
That figure includes iron ore sold by Rio which is owned by joint venture partners like Hancock Prospecting. Rio’s 100% Pilbara share was 50.6 million tonnes.
But the result was better than the gloomy analysts had forecast (did they get the weather impact wrong? Seems so).
Rio said in yesterday’s release that it had "Record first quarter iron ore production, shipments and rail volumes".
"Shipments from the Pilbara exceeded production in the quarter, despite the impact of tropical cyclone Christine which closed our ports for three days at the end of 2013 and affected the progressive recovery of rail and ports into January.
"The full ramp up is well on track to achieve nameplate capacity of 290 Mt/a by the end of the first half of 2014," the company said.
In fact Rio pointed out that the first quarter sales of 64.2 million tonnes (on a wholly-owned basis) were 17% higher than the same period of 2013, setting a new first quarter record.
Sales in the first quarter continued to exceed production due to the drawdown of iron ore inventories built at Pilbara mine sites in previous years to facilitate the rapid ramp up of shipments to 290 million tonnes a year.
The global iron ore price was around $US117 a tonne in Asian trading yesterday. That’s under price levels a year ago.
Rio produced 266 million tonnes last year and is hoping to reach 295 million of iron ore tonnes in 2014.
RIO 1Y – Rio lifts iron ore production despite bad weather
In copper, the company’s lifted its share of production to 156,500 tonnes in the quarter (thanks in part to the new mine in Mongolia and rising production at Escondida in Chile).
That compares to analysts’ forecasts of around 140,000 to 15,000 tonnes.
Copper production in the quarter was up from 133,800 tonnes in the first quarter of 2013, but down on the 165,600 produced in the three months to December.
The 22% rise in output from a year ago will go some way to offsetting the weaker price for copper which has fallen by around 10% so far in 2014.
The fall in output from the December quarter was due to lower grades at the Kennecott mine in Utah, and problems with equipment at Oyu Tolgoi in Mongolia.
Negotiations with the Mongolian Government over the development of the Oyu Tolgoi mine remain incomplete and the funding commitments totalling $US5 billion for the second stage of this mine, have now expired.
The Rio subsidiary building Oyu Tolgoi – Canadian company, Turquoise Hill Resources – said yesterday that it had now asked the 15 banks involved to extend their funding commitments out to September 30.
Coal production rose to more than 5.8 million tonnes in the latest quarter – up from the December quarter and a year earlier.
The 15% jump in output in the latest quarter from a year ago will go someway to offsetting the lower prices for coking and thermal coals.
Rio’s annual meeting of shareholders in London was held overnight and the Australian AGM is set down for next month.
Rio Tinto chief executive Sam Walsh said in yesterday’s statement that the company "has started the year with a series of performance records as we continue to drive productivity gains across our operations.
"Our Pilbara iron ore business has again set new benchmarks for production, shipments and rail volumes for the first quarter and we are well on track to reach nameplate capacity of 290Mt/a by the end of the first half of 2014.
"Our mined copper production benefited from higher ore grades at Kennecott Utah Copper and production ramp up at Oyu Tolgoi and we also had a record first quarter for bauxite, primarily driven by higher production at Weipa."
