Rio Tinto accelerates iron ore production, posts record results

Iron ore production at Rio Tinto’s Pilbara operations rose by 12 per cent in the third-quarter, and the miner says it is on track to deliver a 360 million tonne expansion.

In the three months to September 30, Rio’s global iron ore production was 76.8 million tonnes, a new nine month record.

The extra ore was driven by the miner’s expansion of its Pilbara operations, which reached the first full quarter of production at a 290 Mt/a run in the third quarter.

This equated to 163.9 million tonnes of ore being produced in the first nine months, 12 per cent higher than the same period in 2013.

Rio said the record had been driven by a combination of rail, haul truck and processing plant productivity improvements.

It also achieved its 290 Mt/a run rate in May, two months ahead of schedule.

The record production rates means Rio also had bumper sales, posting a 20 per cent increase with sales of 167.8 million tonnes.

And the miner has no plans of slowing down, confirming its 360 Mt/a expansion is 75 per cent complete, with all rail, marine and wharf works now in place.

The expansion is expected to be complete by the middle of 2015 and Rio said it will generate “significant value for shareholders”.

Rio also posted positive results in its other commodities and increased its copper guidance for the year.

It now expects its share of mined copper production to be approximately 615,000 tonnes (previously 585,000) and refined copper production to be 300,000 tonnes (previously 260,000).

The miner’s share of bauxite and aluminium production for 2014 is unchanged and is expected to be 41 million tonnes and 3.4 million tonnes, respectively.

Production of hard coking coal as down 15 per cent in the third quarter compared to last year due to Hail Creek prioritising the production of thermal coal from a processing plant by-product stream.

Semi-soft coking coal production was 15 per cent lower than the first nine months of last year reflecting changes made to the production mix to maximise revenue through optimising thermal coal production.

Rio is increasing its expected share of thermal coal production to 18.0 million tonnes (previously 17.5 million tonnes), excluding 2.5 million tonnes of production from the Clermont mine prior to divestment.

It said the change is largely as a result of prioritising thermal coal production at Hail Creek and therefore the corresponding guidance for Australian hard coking coal production is now expected to be 7.0 million tonnes (previously 7.4 million tonnes).

Semi-soft production guidance remains unchanged at 3.0 million tonnes.

Rio spent around $566 million on exploration in the first three quarters of 2014, $200 million less than 2013.

Rio’s chief Sam Walsh said he was pleased with the miner’s results.

 “We have delivered another strong quarter with record iron ore production and a solid performance in copper and aluminium,” Walsh said.

“Our strategy of focussing on long-life, low-cost assets means we will continue to generate strong cash flows despite a lower price environment, resulting in materially increased and consistent cash returns to shareholders.”

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