Rio Tinto (RIO) continues to drive iron ore production and exports higher, with no slackening in its efforts to expand into the depressed market.
In fact the company has made a solid start to its 2015 financial year with copper, coal, iron ore and bauxite all seeing higher production and sales.
The company told the ASX yesterday in its March quarter production report that shipments rose 8% in the latest period to 72.5 million tonnes, from the first quarter of 2014.
But there was a 12% fall from the December quarter, which is not the basis for a valid comparison. Bad weather and transport problems were blamed for that sequential fall.
(The correct one is with the same quarter in the previous financial year.)
The 12% rise in production in the March quarter from the same quarter a year ago came despite the more than halving in the global iron ore price in the same time.
That tells us there’s no slackening in the company’s drive to push output and exports higher. Rio repeated its earlier projections that it would ship 350 million tonnes of iron ore in calendar 2015.
And it said to achieve that, it will have to draw down on stocks to make this target.
The heart of Rio’s business and revenues are the Pilbara iron ore mining and export operations.
The company said first quarter production of 71.1 million tonnes (Rio Tinto share 57.3 million tonnes) was 12% higher than the same period in 2014 following commissioning of the Nammuldi wet plant and the ramp up of Hope Downs 4. First quarter production was 6% lower than the fourth quarter of last year due to the impact of wet weather throughout the quarter.
Quarterly sales of 69.3 million tonnes (Rio Tinto share 55.4 million tonnes) were 8% higher than in the first quarter of 2014 but 12% lower than in the fourth quarter of last year.
"This was a result of weather impacts from Tropical Cyclone Olwyn and a train derailment which temporarily blocked the inload train circuit at Dampier", according to yesterday’s statement.
Rio investors took the news in their stride and the shares jumped 1.5% or 84c to $55.50 by the close yesterday – better than the rise in the wider market.
Also helping bolster sentiment was another rise in global iron ore prices to $US51.75 yesterday morning – a rise of close to 9% in the past week or so.
RIO 1Y –
Rio CEO Sam Walsh said Rio would continue to work to drive efficiency in its business as it competes for market share.
“Our aim is to protect our margins in the face of declining prices and maximise returns for shareholders throughout the cycle,” Mr Walsh said.
Expansion of rail and shipping infrastructure at its Pilbara operations remained on track for completion by the end of June.
It meanwhile reported a 12% on-quarter rise in mined copper output to 144,100 tonnes, underpinned by sharply higher output at the Escondida mine in Chile, which was expected. That will also show up in BHP’s quarterly report today.
Rio’s copper subsidiary in Mongolia, Turquoise Hill Resources, revealed that copper concentration production at Oyu Tolgoi fell by 30% in the March quarter thanks to plant shutdowns and low grades through the mill.
As previously announced, Rio Tinto expects its share of mined copper production to be between 500 and 535 thousand tonnes and refined copper production to be between 190 and 220 thousand tonnes.
The company reported record first quarter bauxite production was 4% higher than the first quarter of 2014, primarily due to a strong performance at Weipa.
And aluminium production in the first quarter was in line with the same period of 2014, despite the partial shutdown at Kitimat, which continues to prepare for first hot metal at the modernised smelter by mid-2015.
Aluminium production totalled 809,000 tonnes in the March quarter. The metal was the company’s said major profit centre in 2014, having overtaken copper.
Rio Tinto said its 2015 share of production remains unchanged and is expected to be 43 million tonnes of bauxite, 8 million tonnes of alumina and 3.3 million tonnes of aluminium.
Hard coking coal production was 10% higher than the first quarter of 2014 as a result of improved production rates at Kestrel South mine in Queensland as the longwall ramps up and was 22% higher than the fourth quarter of 2014 which included a longwall panel changeover.
Semi-soft coking coal production was 23% higher than the fourth quarter of 2014 reflecting mine production sequencing.
Thermal coal production was 5% higher than the first quarter of 2014, primarily due to increased tonnage at Hail Creek where production from a processing plant by-product stream was prioritised in order to deliver increased margins in current market conditions.
Rio Tinto said its 2015 share of production is expected to be 18 to 19 million tonnes of thermal coal, 3 to 3.4 million tonnes of semi-soft coking coal and 7.1 to 8.1 million tonnes of hard coking coal.
