Rio Tinto has seen a 21 per cent increase in its first half underlying earnings, rising to $5.1 billion.
During this same time period the miner also increased its operating cash flow by eight per cent.
Rio Tinto CEO Sam Walsh stated “the outstanding half year performance reflects the quality of our world-class assets, our programme of operational excellence and our ability to drive performance during a period of weaker prices”.
The miner instituted a harsh cutback program, designed to dramatically reduce operating costs , looking to shed $2 billion costs over 12 months.
It had also sold $2.5 billion worth of assets after earlier outlining $3.5 billion in assets sales.
Following this the miner saw a number of new records set in iron ore production as it focused on operational productivity.
Rio Tinto has so far produced 10 per cent more iron ore this year than it did during the same period last year as an expansion of its Pilbara operations coupled with productivity gains pays off.
Rio has posted record first half iron ore production and sales of 132.4 million tonnes and 136.1 million tonnes respectively from its Pilbara iron ore business.
The result comes as the miner’s global iron ore production for the second quarter increased by 11 per cent to the previous corresponding period at 73.1 million tonnes.
This led to an increase in shipments for the second quarter also, which rose by 23 per cent on 2013 figures to 75.7 million tonnes.
Iron ore production guidance for the full year remains unchanged at 295 million tonnes.
The growth in iron ore production comes after Rio announced in May that had completed a ramp of it its Pilbara iron ore system of mines, rail and ports, which had reached a run rate of 290 million tonnes a year.
“We achieved another half of very strong operating performance, powered by productivity gains across our business,” Rio CEO Sam Walsh said of the results.
“Our iron ore expansion continues to deliver high-margin growth reinforcing our position as a low cost producer. It has allowed us to increase shipments of our Pilbara Blend products, providing our customers with reliable, long-term supply of stable quality.”
The miner said it was targeting work to increase its run rate in the Pilbara to 390 million tonnes a year as planned.
This has all played a major part in the miner’s growth in revenue.
“These results show that our current strategic and management focus is making a meaningful contribution to cash flow generation,” Walsh said.
“During the first half [of 2014] we have increased underlying earnings by 21 per cent to $5.1 billion and enhanced operating cash flow by eight per cent; we delivered what we said we would, exceeding our $3 billion operating cash cost reduction targets six months ahead of schedule while producing record volumes and driving productivity improvements across all our businesses,” he said.
In regards to cost cutting, Walsh said Rio Tinto has “decreased net debt $6 billion compared with this time last year, through our stronger operating cash flows, sharply reduced capital spend and proceeds from divestments”.
The miner saw a year on year reduction of 48 per cent in capital expenditure.
The reduction of 2200 across the group played a large part of this.
“We are confident Rio Tinto’s low cost, diversified portfolio will continue to generate strong growth and sustainable cash flows over the coming years,” he said.
Year on year the miner has seen a massive 156 per cent increase in net earnings from $1.72 billion 2013 to $4.402 billion in 2014.
In terms of future growth, Rio Tinto remains positive.
“Overall we remain confident of the long-term fundamentals of demand, whilst recognising the changing nature of China’s economic development,” the miner stated.