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Solid Q2 results for Rio Tinto

Mining giant Rio Tinto has reported “solid” operational performance across most commodities in Q2 2018, “rounding out a strong H1 performance for the group”.

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Rio Tinto’s AutoHaul project achieved two major milestones
Rio Tinto’s AutoHaul project achieved two major milestones

CEO J-S Jacques commented: “Our increasingly flexible Pilbara iron ore system continued to perform well. Our bauxite and copper businesses also delivered strong operating results, demonstrating the success of our ongoing mine-to-market productivity programme, which is increasingly important in an environment of rising cost inflation.

 

“Our sustained focus on cash generation, combined with disciplined capital allocation, will ensure we continue to deliver superior returns to our shareholders across the short, medium and long term.”

 

Among the key results, Rio Tinto highlighted that Pilbara iron ore shipments of 88.5 Mt (100% basis) in the second quarter were 14% higher than the second quarter of 2017, benefiting from better weather and reflecting improved productivity across the system. Shipments in 2018 are expected to be at the upper end of the existing guidance range of 330-340 Mt (100% basis).

 

Bauxite production of 13.3 Mt was 3% higher than the corresponding quarter of 2017, due to continued operational improvements. Third party shipments increased by 10% to 8.7 Mt due to firm demand.

 

Aluminium production of 0.9 Mt was 3% lower than the second quarter of 2017, due primarily to labour disruptions at the non-managed Becancour smelter in Canada and a power interruption at the Dunkerque smelter in France.

 

Mined copper production of 156,800t was 26% higher than the corresponding quarter of 2017, reflecting strong production at Escondida following a labour union strike in the first half of last year.

 

Hard coking coal production was 40% higher than the corresponding quarter of 2017, due primarily to the impact of Cyclone Debbie last year.

 

Titanium dioxide slag production was 27% lower than the second quarter of 2017. Production was suspended at Rio Tinto Fer et Titane in Sorel-Tracy following a fatality on 26 April 2018. Production at Richards Bay Minerals was impacted by ongoing labour disputes between contractors and their employees.

 

Production at Iron Ore Company of Canada was significantly impacted in Q2, where operations were suspended while a new labour agreement was reached. Rio said that operations returned to normal production rates by the end of June 2018.

 

Cost inflation is being experienced, particularly in Rio Tinto’s Aluminium group with higher raw material costs. Disruptions during H1 have also impacted unit costs at IOC and RBM.

 

The major growth projects remain on track, the company said, with first bauxite shipment from Amrun expected in H1 2019 and construction of the first drawbell at Oyu Tolgoi Underground anticipated in mid-2020.

 

Rio Tinto added that its AutoHaul project achieved two major milestones, with regulatory approval on 18 May 2018 and the first loaded autonomous train journey from mine to port completed on 10 July 2018.

 

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