16th Oct 2018 09:58
LONDON (Alliance News) - Rio Tinto PLC on Tuesday reported a "consistent" third-quarter performance, with copper in particular doing well, though core iron ore output did fall.
The miner's copper output was 32% higher year-on-year for the three months to the end of September, and 2% up on the previous quarter, at 159,700 tonnes.
Rio Tinto attributed the rise due to higher grades from Rio Tinto Kennecott, which operates Utah's Bingham Canyon mine.
Within copper, Chile's Escondida increased output 6% year-on-year but the figure fell 5% quarter-on-quarter, while at Oyu Tolgoi in Mongolia, production was flat quarter-on-quarter but increased 7% year-on-year.
Copper guidance for 2018 is towards the upper end of Rio Tinto's 510,000 to 610,000 tonne range, from 478,100 tonnes in 2017.
Diamond production fell 19% at the Argyle mine year-on-year and 9% at Diavik to 3.8 million carats and 1.1 million carats, respectively, with these figures up 10% and down 7% year-on-year respectively.
The Argyle mine is in Western Australia, while Diavik is in Canada's Northwest Territory.
Argyle production suffered year-on-year due to higher grades a year before from alluvial tailings, while Diavik slipped due to lower grades.
Diamond output for 2018 is guided between 17 million and 20 million carats, from 21.6 million carats in 2017.
Pilbara iron ore shipments were down 5% year-on-year and 7% quarter-on-quarter to 81.9 million tonnes, with Pilbara iron ore production down 3% both on the year and on the prior quarter.
Rio Tinto attributed the lower output due to planned maintenance and safety pauses across all operations after a fatality at its Paraburdoo mine in Western Australia.
For 2018, Rio Tinto expects Pilbara shipments to be at the top end of guidance of 330 million to 340 million tonnes. Last year, the figure was 330 million.
Iron ore makes up the great majority of Rio Tinto's earnings. In 2017, of group earnings before interest, tax, depreciation, and amortisation of USD19.53 billion, iron ore contributed USD11.52 billion, or 59%.
At the start of October, Rio Tinto said it would be investing USD820 million into Pilbara to develop various assets in partnership with Japan's Mitsui & Co Ltd and Nippon Steel & Sumitomo Metal Corp.
The next largest segment for Rio Tinto is aluminium, following by energy & minerals and then copper & diamonds.
Rio Tinto's aluminium production for the third quarter dipped 1% year-on-year but rose 3% on the quarter to 880,000 tonnes.
Within that, bauxite output fell 1% year-on-year and 4% quarter-on-quarter to 12.7 million tonnes.
Bauxite was hit by a dip in production at the Sangaredi mine in Guinea due to expansion work.
Rio Tinto blamed the fall in aluminium output on industrial action at the Becancour smelter in Quebec, which began last January.
Bauxite output for 2018 is expected to be between 50 million and 51 million tonnes, from the previous range of 49 million to 51 million tonnes and compared to 50.8 million tonnes in 2017.
Aluminium production in 2017 came in at 3.6 million tonnes, and Rio Tinto has cut its production guidance for 2018 to between 3.4 million and 3.5 million tonnes, from 3.5 million to 3.7 million tonnes previously due to the strikes at Becancour.
Rio Tinto has exploration projects in some 16 countries, covering eight different commodities.
The focus during the third quarter of 2017 was mainly on copper targets across 12 countries, including Australia, Canada, the US, and Mongolia.
Chief Executive Jean-Sebastian Jacques said: "We have delivered consistent operational performance in the third quarter, highlighted by strong production from the group's copper assets.
"We made strong strategic progress with the full exit from coal, the announcement of the additional USD3.2 billion of share buy-backs, and the signing of a binding conditional agreement to exit Grasberg for USD3.5 billion," Jacques continued.
"We continue to pursue all opportunities to improve productivity and drive enhanced cash flow generation. This, combined with the disciplined allocation of capital, will ensure we continue to deliver superior returns to our shareholders in the short, medium and long-term."
The sale of the Grasberg mine was announced at the end of September. Rio Tinto had a 40% right to production above a pre-agreed level from Grasberg and 40% of all production after 2022, and this is being sold to state mining firm PT Indonesia Asahan Aluminium.
Rio Tinto has sold a number of other assets recently, including its Hail Creek, Valeria, and Kestrel coal assets in Australia.
Just prior to the Grasberg sale news, the miner said it would be returning the proceeds of these coal sales to its shareholders through a USD3.2 billion buyback.
The company had also agreed to sell aluminium plants in Iceland, the Netherlands, and Sweden to Norsk Hydro ASA for USD345 million, alongside its 50% share in a fluoride plant in Sweden.
However, Norsk Hydro withdrew the offer after feedback from the European Commission.
Rio Tinto's shares were 0.5% lower on Tuesday morning at a price of 3,716.50 pence each. The stock is down about 6% so far in 2018.
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