Rio Tinto shares hit a 25 month high yesterday and looking at the third quarter operations report it was easy to see why.
Record amount of iron ore, alumina and coking coal were produced in the September quarter.
And on top of that is the upsurge in commodity prices generally as the US dollar weakens ahead of Federal Reserve moves to start a new round of spending early next month.
The Australian dollar hit a new high of 99.94 USc overnight, and gold hit a new high in trading of $US1,388 an ounce, just shy of $US1,300.
Rio shares touched a high of $82.16 during trading yesterday and they closed up 4.4%, or more than $3.40, at $82.08.
That’s the highest the shares have been since September 2008.
Even though the news from the production report wasn’t all bullish (copper production remains down, thermal coal in NSW was down, as is uranium from ERA).
But refined copper production and gold were higher, which was well timed to take advantage of record or near record prices towards the end of the quarter.
Rio Tinto’s share of iron ore production in the three months to September 30 was 47.608 million tonnes, up from 43.61 million tonnes in the June quarter.
That made talk of hits from lower Chinese imports look rather silly and uninformed.
The group’s share of alumina production totalled 2.347 million tonnes, up from 2.24 million previously, while coking coal output rose to 2.43 million from 2.39 million tonnes previously.
"This quarter, we achieved record production in iron ore, alumina and coking coal," chief executive Tom Albanese said.
"We continue to run our operations at close to, or above, capacity rates, taking advantage of strong prices for our products."
Mined copper and gold production was down 19% and 33%, respectively, compared to the third quarter of 2009.
This was due largely to lower grades at the massive Grasberg mine in Indonesia.
But refined copper and gold production was up 6% and 46%, respectively, reflecting greater efficiencies at the Kennecott Utah Copper smelter in the US.
Rio Tinto said its global iron ore operations were expected to continue producing at close to nameplate capacity for the remainder of 2010.
Full year iron ore production is expected to be about 179 million tonnes on an attributable basis to Rio Tinto and 234 million tonnes on a 100% basis, which also includes its joint venture partners’ share of production.
Attributable iron ore production during the first nine months of this year was 10% higher than the same period of 2009.
Rio said its Hamersley operations in Western Australia’s Pilbara region benefited during the September quarter from the ramp-up of new replacement production from new areas.
"Pilbara production matched the record third quarter of 2009 as the mines continued to operate at above nameplate capacity.
"Hamersley production rebounded from the second quarter as the new Brockman 4 and Western Turner Syncline mines ramped up.
"Production from Robe River similarly benefited from rising production from Mesa A," Rio said.
Mr Albanese said Rio Tinto had delivered consistently strong operating performance in 2010 and the third quarter was no exception.
"We approved more than $US4 billion ($4.05 billion) of capital projects during the third quarter, including investment towards the expansion of our Pilbara iron ore operations to 330 million tonnes per annum," Mr Albanese said.
"This takes our total approvals this year to $US5.5 billion and is consistent with our capex guidance of $US13 billion over the 18 months to December 2011.
"Rio Tinto approved capital projects totalling $4.2 billion during the third quarter, including $1.3 billion for the Pilbara iron ore expansions, $0.8 billion for the completion of the Argyle Diamonds underground mine and $1.6 billion for the development of the Hope Downs 4 iron ore mine in the Pilbara."
Rio said bauxite production increased 17% on the third quarter of 2009 in line with higher demand. Alumina production was a quarterly record; aluminium production was down 2%.
"The continued recovery in diamonds and minerals production reflected improving market fundamentals compared with the difficult conditions of 2009."
"Pre-tax and pre-divestment expenditure on exploration and evaluation charged to the profit and loss account in the first nine months of 2010 was $371 million compared with $356 million in same period of 2009.
"During the first nine months of 2010 the Group realised $71 million (pre-tax) from the divestment of central exploration properties, compared with $68 million in the same period of 2009," Rio said.
And overnight it was reported that competition authorities in Germany and Japan had for the first time, expressed or revealed their opposition to the planned iron ore joint venture with BHP Billiton.
Both Rio and BHP issued statements out of LOndon noting the news, but saying little else.
