Rio Tinto optimistic about recovery in Chinese demand

Piles of iron ore at Cape Lambert, Pilbara. Source: Rio Tinto

Rio Tinto has reported strong production results in the first quarter of the 2020 calendar year, despite some of its projects being affected by coronavirus government restrictions.

During the first quarter, Rio Tinto shipped 73 million tonnes  of iron ore from its mines in the Pilbara region of Western Australia, which was five per cent higher than the first quarter of 2019.

Rio Tinto also ramped up production at Amrun bauxite mine on the Cape York Peninsula in Queensland over the past year, which contributed to an eight per cent jump in bauxite productions from the first quarter of 2019 to 73 million tonnes in 2020 first quarter.

Chief executive Jean-Sebastien Jacques said all of the company’s assets are operating in a business-as-usual manner , with strict health measures in place.

“All of our assets continue to operate and we achieved a very robust production performance in the first quarter,” he said.

However, the company noted that some of its major projects are being impacted by coronavirus, including government imposed restrictions on the movement of goods and people.

While demands in China appear to be recovering, the company noted that recovery rates across regions may differ.

Recovering demand for iron ore in China is seen by the company as a positive prospect, while the company noted that outlook for demand recovery in the rest of the world remained “uncertain.”

Lower global aluminum demands as a result of reduced automotive production has prompted Rio to operate its ISAL aluminium smelter in Hafnarfjorthur in Iceland at 85 per cent capacity. This resulted in two per cent lower aluminium production of 0.8 million tonnes during the 2020 first quarter compared to first quarter of 2019.

Rio produced 133,000 tonnes of mined copper during the quarter, eight per cent lower than the same period in 2019, reflecting lower copper grade recovery.

Rio Tinto is still struggling to bring Kennecott copper mine in Utah in the United States back to normal operations following a 5.7 magnitude earthquake in March this year. This has impacted the company’s full year copper guidance.

The company has maintained most of its production guidance for full year 2020 unchanged, with only adjustments made to mined and refined copper guidance due to potential second half outputs at Kennecott and Escondida copper-gold-silver mine in Chile.

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