Rio Tinto has become the world’s biggest iron ore miner, overtaking Brazil’s Vale in the three months to March to grab bragging rights, even if it’s going to be a brief reign as top miner.
Vale said earlier this week that total iron ore output slipped 4.9% year-on-year in the first quarter to 81.95 million tonnes, although the company maintained its 390 million tonne target for 2018. Vale blamed heavy rains in the first three months of the year for the reduction in output (http://www.vale.com/en/aboutvale/news/pages/1q18-production-report.aspx), along with the decision to cut output of lower grade ore and maximise production of higher grade – 62% to 65% iron oxide – because Chinese steel mills were demanding more of the higher grade ores.
In its first quarter production report on Wednesday, Rio Tinto said (http://www.riotinto.com/media/media-releases-237_25212.aspx) said production in the three months to the end of March rose 8% to 83.1 million tonnes. But Rio’s full year guidance is short of Vale’s at between 330 and 340 million tonnes.
Iron ore shipments also rose, by 5%, with the miner attributing the growth to “productivity improvements and fewer weather disruptions” in the quarter.
Rio reported higher bauxite production, up 12% to 12.653 million tonnes, and a hefty 65% leap in mined copper production, to 139,300 tonnes as production ramped up at the vast Escondida mine in Chile, after a lengthy strike hit production at the world’s biggest copper mine in the first half of 2017.
Rio Tinto CEO J-S Jacques said in the statement “We delivered a solid operational performance across most commodities in the first quarter of 2018. 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 $5 billion of divestments in the quarter, highlighting our ongoing drive to strengthen the portfolio and raise return on assets. By continuing to advance our mine-to-market productivity programme, whilst maintaining our focus on the disciplined allocation of cash, we will continue to deliver superior returns to our shareholders.”
Meanwhile Rio also said yesterday it may need to update its full-year aluminium production guidance because of US sanctions against Russia.
The global miner on Wednesday said it was already prepared to adjust aluminium production guidance of 3.5 million to 3.7 million tonnes once it has sold two smelters, but that more may be necessary.
“Adjustments may also be made as a consequence of the US sanctions," Rio Tinto said in its quarterly production report.
It did not say by how much it would need to update guidance.
Russian aluminium producer Rusal is Rio Tinto’s 20% partner in the Queensland Alumina refinery and the Rio has already said it would declare force majeure on certain bauxite contracts because of sanctions designed to punish Moscow for actions that include meddling in the 2016 presidential election.
First-quarter aluminium production was 5% lower than in the prior corresponding period last year, largely to an ongoing lockout at the Becancour smelter in Quebec and a power incident at the Dunkirk smelter in France. Rio shares rose 1.1% to $78.96.
